All shredded wheat producers have decided to add a new ingredient to shredded wheat, the "crunch enhancer." Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like shredded wheat more than before. What happens to the supply and demand curves for shredded wheat now that is costs more to produce and consumers like it better?

Question

Quizplus · Accepted Answer

The supply curve shifts leftward because the cost of production increases with the addition of the new ingredient, making it more expensive to produce shredded wheat. The demand curve shifts rightward because consumers like shredded wheat more with the new ingredient, increasing their willingness to buy it.

All Shredded Wheat Producers Have Decided to Add a New