Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.What happens in the market for walnuts if the Centres for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?
A)D increases, S no change, P and Q increase
B)S increases, D no change, P decreases, Q increases
C)D and S increase, P and Q decrease
D)D no change, S increases, P decreases, Q decreases

Question

Quizplus · Accepted Answer

The announcement by CDC will increase the demand for walnuts as more people will want to consume them to lower bad cholesterol. This will lead to an increase in D, while S remains the same. The increase in demand will cause an increase in both P and Q as the market moves towards a new equilibrium.

Let D = Demand, S = Supply, P = Equilibrium