Today,the price of peanuts increases.Peanut butter producers and peanut butter consumers expect that the price of peanut butter will rise in the future.In the current market for peanut butter,the equilibrium price rises and the equilibrium quantity increases.It must be the case that

Question

Quizplus · Accepted Answer

The increase in equilibrium price and quantity indicates that the demand for peanut butter increased by more than the supply decreased. This is because an increase in demand, all else being equal, raises both the equilibrium price and quantity, while a decrease in supply, all else being equal, raises the price but lowers the quantity. The observed outcome suggests that the effect of the demand increase outweighs the effect of the supply decrease.

Today,the Price of Peanuts Increases