A Decrease in the Demand for Soft Drinks Due to Changes

question 92

Multiple Choice

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in

• A)a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price.
• B)a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.
• C)a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
• D)an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.

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Definitions:

Production Function

An equation that specifies the output that can be produced by varying amounts of inputs, demonstrating how efficiently these inputs are converted into outputs.

Labor

The human effort, either physical or mental, used in the production process to create goods or provide services.

Monopolistic Distributor

A distributor who has exclusive control over the supply of a particular product or service in the market, limiting competition.

Marginal Cost

The amount of money needed to produce one more unit of a specific good or service.