All Else Equal, a Shortage of Orange Juice Would Cause

question 22

Multiple Choice

All else equal, a shortage of orange juice would cause the

• A)equilibrium quantity of breakfast drinks to increase and the equilibrium price of breakfast drinks to decrease.
• B)equilibrium price of breakfast drinks to increase and the equilibrium quantity of breakfast drinks to decrease.
• C)equilibrium price and quantity of breakfast drinks to increase.
• D)equilibrium price and quantity of breakfast drinks to decrease.

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Definitions:

Constant-Cost Industry

Constant-Cost Industry refers to an industry in which the input prices do not change as industry output changes, leading to a flat supply curve.

Long-Run Equilibrium

A state where all factors of production and inputs can be adjusted by firms, and no economic forces are inducing firms to change their output or production levels.

Average Total Cost

The cost per unit is determined by dividing the overall production costs, which include both fixed and variable expenses, by the total units manufactured.

Marginal Cost

The supplementary expenditure incurred by making one more unit of a product or service.