Exhibit 4.6

-In the market for chewing gum, the current price is 50 cents per pack and 100,000 packs are sold. Which of the following events is most likely to result in a new equilibrium price of 60 cents and quantity of 90,000 packs?

Question

Exhibit 4.6
 
-In the market for chewing gum, the current price is 50 cents per pack and 100,000 packs are sold. Which of the following events is most likely to result in a new equilibrium price of 60 cents and quantity of 90,000 packs?

Quizplus · Accepted Answer

An increase in the prices of the ingredients used to make chewing gum will cause an increase in the cost of production for the gum manufacturers, leading to a decrease in supply as the manufacturers might not be able to produce as much gum as before due to the increase in costs. This decrease in supply would cause an increase in the equilibrium price and a decrease in the equilibrium quantity, leading to a new equilibrium price of 60 cents and a quantity of 90,000 packs. None of the other events listed would directly result in this specific change in equilibrium price and quantity.

Exhibit 4.6 -In the Market for Chewing Gum, the Current Price Is