Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?
A)a decrease in the price of tomatoes
B)an increase in the price of tomatoes
C)an increase in the price of mustard,a substitute for ketchup
D)an increase in the price of french fries,a complement for ketchup

Question

Quizplus · Accepted Answer

An increase in the price of tomatoes, the main ingredient in ketchup, would cause the supply of ketchup to decrease and therefore shift the supply curve to the left. This would increase the equilibrium price of ketchup and decrease the equilibrium quantity of ketchup. A decrease in the price of tomatoes, as stated in choice A, would have the opposite effect on the equilibrium price and quantity of ketchup. Choices C and D both refer to factors that would not directly affect the demand or supply of ketchup, and therefore would not have an impact on the equilibrium price and quantity.

Which of the Following Would Cause the Equilibrium Price of Ketchup