The popularity of indoor hammocks has increased as people seek unique ways to relax. At the same time, the cost of producing indoor hammocks has fallen. Based on this information, what is the change in the equilibrium price and quantity of indoor hammocks?

Question

Quizplus · Accepted Answer

The increased popularity of indoor hammocks shifts the demand curve to the right, increasing both the equilibrium price and quantity. However, the decreased cost of production shifts the supply curve to the right, lowering the equilibrium price but increasing the quantity. These opposing effects on price make its overall direction indeterminate, but both effects increase the equilibrium quantity.

The Popularity of Indoor Hammocks Has Increased as People Seek