The equilibrium price of peanut butter is $5.A study comes out that says the fat in peanut butter is good for your heart.Holding all other factors constant,which of the following scenarios could happen?

Question

Quizplus · Accepted Answer

The study that indicates the health benefits of peanut butter will cause an increase in demand for the product. With no change in supply, the increase in demand will cause an increase in the equilibrium price of peanut butter. Choice A and E are ruled out because they mention supply shifts, and the question clearly states that all other factors are held constant. Choice B is also ruled out because it mentions a decrease in price, which is not consistent with an increase in demand. Choice C is unlikely since a positive health report will usually increase demand for peanut butter. Therefore, the best choice is D.

The Equilibrium Price of Peanut Butter Is $5