You are a farmer who raises chickens and sells the eggs. A recent news report announced that eggs have a positive health benefit of improving immunity systems in humans.
-Refer to the figure above. Suppose that at the same time as the news report, you learn that the cost to feed your chickens has fallen. The news report and the change in feed cost will________ .

Question

Quizplus · Accepted Answer

The positive news report about the health benefits of eggs will increase the demand for eggs, which will lead to an increase in both the equilibrium quantity and price of eggs. However, the decrease in the cost of feed will decrease the cost of production for farmers, which will increase the supply of eggs. The net effect will be an increase in the equilibrium quantity of eggs, but the impact on the equilibrium price will depend on the magnitude of the shifts in demand and supply. Without more information, we cannot determine the exact effect on the equilibrium price.

You Are a Farmer Who Raises Chickens and Sells the Eggs