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

If the study says the fat in peanut butter is good for your heart, then demand for peanut butter will increase. This will cause an increase in both the price and quantity of peanut butter; however, we know that the equilibrium price is $5. Given this, an increase in demand will cause an increase in price, but it will not increase so much that it is above $7. Therefore, D is the best choice.

The Equilibrium Price of Peanut Butter Is $5