Consider the market for burritos, which is currently in equilibrium. Now, suppose that two events happen simultaneously: (1) the price of tortillas, used in the production of burritos, increases and (2) a new advertising campaign increases the popularity of burritos among consumers. What effect might these events have on the market for burritos?Supply will increase.Demand will increase.The equilibrium price will increase.The equilibrium quantity will decrease.
A) I, II, and III only
B) I and II only
C) I and IV only
D) II and III only

Question

Quizplus · Accepted Answer

The price of tortillas increasing leads to a decrease in supply (not an increase), while the new advertising campaign increases demand. These combined effects will likely increase the equilibrium price due to higher demand and lower supply. The effect on equilibrium quantity is uncertain without more information, as it depends on the relative magnitude of the shifts in supply and demand.

Consider the Market for Burritos, Which Is Currently in Equilibrium