Say the Market for Cereal Is Initially in Equilibrium When

question 63

Multiple Choice

Say the market for cereal is initially in equilibrium when all the major newspaper published the findings from study that say that eating 2 cups of cereal each day significantly reduces the risk for a hear attack. Other things equal, the publication of this findings will:

• A)decrease the market quantity of cereal
• B)decrease the market price of cereal.
• C)increase the supply of cereal.
• D)increase the quantity supply of cereal.

---

Definitions:

Market-clearing Price

The price at which the quantity demanded by buyers equals the quantity supplied by sellers, eliminating any surplus or shortage in the market.

Surplus

The condition in which the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Foreign Currency

Currency used in a country other than one's own, involved in international trade, investments, and travel.

Quota

A government-imposed trade restriction that limits the quantity or monetary value of goods that can be imported or exported during a specific time.