If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then:
A) these two effects cancel each other out and there is no change in the margarine market equilibrium.
B) the demand curve shifts left and the supply curve shifts right.
C) there is a margarine price increase.
D) there is an excess demand for margarine.
E) the equilibrium quantity of margarine must increase.

Question

Quizplus · Accepted Answer

The increase in the number of margarine suppliers will shift the supply curve to the right, which would lower the price of margarine if demand remained constant. However, if consumers switch away from margarine, this will shift the demand curve to the left. The combined effect is that the market equilibrium will shift to a lower quantity and a lower price, but the exact magnitude of the shift will depend on the relative magnitudes of the supply and demand shifts.

If Consumers Switch Away from Eating Margarine at the Same