Suppose a drought causes most fruit crops to fail, decreasing the amount of available fruit. What changes could we expect to see in the market for fruitcake?
A) An increase in the supply of fruitcake
B) A decrease in the supply of fruitcake
C) An increase in the demand for fruitcake, but no change in the supply of fruitcake
D) A decrease in the demand for fruitcake, but no change in the supply of fruitcake

Question

Quizplus · Accepted Answer

If the supply of fruit decreases, it means there will be less fruit available for making fruitcakes. This will cause a decrease in the supply of fruitcake, as it will become more difficult and expensive to produce. As a result, we may see an increase in the price of fruitcake, as producers try to recoup their costs. It is unlikely that there will be an increase in demand for fruitcake, as people will have less access to fruit and may turn to other desserts or snacks instead.

Suppose a Drought Causes Most Fruit Crops to Fail, Decreasing