The Equilibrium Price of Peanut Butter Is $5

question 124

Multiple Choice

The equilibrium price of peanut butter is $5.A study comes out that says the fat in peanut butter is good for your heart.Holding all other factors constant,which of the following scenarios could happen?

• A) The price of peanut butter increases to $7 because of a supply shift.
• B) The price of peanut butter decreases to $4 because of a supply shift.
• C) The price of peanut butter decreases to $4 because of a demand shift.
• D) The price of peanut butter increases to $7 because of a demand shift.
• E) The price of peanut butter increases to $7 because of a demand and a supply shift.

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Definitions:

Offeror

The individual or party that presents a proposal or contract to another party for acceptance.

Reject

To refuse to accept, submit to, believe, or make use of.

Option Contract

A contract granting an individual the right, but not the obligation, to buy or sell an asset at a future date at an agreed-upon price.

Offeror

The party in a contract negotiation that presents the terms of the agreement to the offeree for acceptance.