In the market for chewing gum, the current price is 50 cents per pack and 100, 000 packs are sold.Which of the following events would lead to a new equilibrium price of 60 cents and quantity of 90, 000 packs?

Question

Quizplus · Accepted Answer

An increase in the price of the ingredients used to make chewing gum would increase the cost of production for gum manufacturers, which would in turn increase the price of chewing gum. This would lead to a decrease in the quantity demanded for gum and result in a new equilibrium price and quantity of 60 cents and 90,000 packs respectively. None of the other choices have a direct impact on the supply or demand of chewing gum.

In the Market for Chewing Gum, the Current Price Is