What Would Happen to the Equilibrium Price and Quantity of Lattés

question 194

Multiple Choice

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

• A)Both the equilibrium price and quantity would increase.
• B)Both the equilibrium price and quantity would decrease.
• C)The equilibrium price would increase, and the equilibrium quantity would decrease.
• D)The equilibrium price would decrease, and the equilibrium quantity would increase.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, representing the value of all goods and services produced over a specific time period at constant prices.

Depreciation

The gradual reduction in the economic value of the physical assets of a company due to wear and tear over time, or the loss in value of a currency.

NDP

Net Domestic Product; it calculates the total value of all goods and services produced within a country in a specific period minus depreciation.

Intermediate Product

Goods that are used in the production process to make other goods, rather than being bought by consumers.