Suppose a scientific report states that fish contain dangerously high levels of mercury (toxic to humans). At the same time, the price of diesel fuel, used by fishermen to fuel their boats, falls. What is the effect on the market for fish?
A) A decrease in demand and a fall in price and quantity sold
B) A decrease in demand and supply; price and quantity sold falls
C) A decrease in demand and an increase in supply; price falls but the change in quantity is ambiguous
D) A decrease in demand and supply; price and quantity sold rises

Question

Quizplus · Accepted Answer

The decrease in demand due to health concerns about mercury will lower the price, while the decrease in diesel prices will increase supply, also putting downward pressure on price. The overall effect on quantity is ambiguous because it depends on the relative shifts in demand and supply.

Suppose a Scientific Report States That Fish Contain Dangerously High