All cereal producers have decided to add a new ingredient,the "crunch enhancer," to cereals.Crunch enhancer keeps cereals crisper longer in milk and,as a result,consumers decide they like cereal more than before.What happens to the supply and demand curves for cereal now that it costs more to produce and consumers like it better?

Question

Quizplus · Accepted Answer

The addition of the "crunch enhancer" increases production costs, which typically reduces the quantity supplied at each price point, shifting the supply curve leftward. Simultaneously, if consumers like cereal more because of this ingredient, their demand for cereal increases, shifting the demand curve rightward.

All Cereal Producers Have Decided to Add a New Ingredient,the