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:

Output Contract

An agreement between a seller and a buyer where the seller agrees to sell all the production to the buyer, who in turn agrees to purchase the entire output.

Operating Schedule

A plan or timetable outlining the hours or periods a facility, service, or piece of equipment is in operation.

Civic Club

An organization of citizens focused on promoting community welfare, civic improvements, and social activities.

Beer Distributor

A business that has the authorization to distribute beer from manufacturers to retailers.