What Would Happen to the Equilibrium Price and Quantity of Lattés

question 62

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 steamed milk,which is used to make lattés,and scientists discovered that coffee prevents heart attacks?

• 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 effect on equilibrium quantity would be ambiguous.
• D)The equilibrium quantity would increase,and the effect on equilibrium price would be ambiguous.

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Definitions:

Present Value

The present value of an anticipated sum of money or series of cash flows, considering a certain return rate.

Discounting

The process of determining the present value of a payment or a stream of payments that will be received in the future.

Capital Investments

Financial investments in assets such as property, industrial equipment, or technology, intended to improve a company's capacity or efficiency over the long term.

Future Value

The value of a current asset or amount of money at a specified date in the future, adjusted for interest or inflation.