Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for walnuts if the Centre for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?
A)D increases, S no change, P and Q increase.
B)D no change, S increases, P decreases, Q increases.
C)D and S increase, P and Q decrease.
D)D no change, S increases, P decreases, Q decreases.

Question

Quizplus · Accepted Answer

The announcement by the Centre for Disease Control and Prevention that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol will increase the demand for walnuts as people become more willing to consume them. However, the supply of walnuts is unlikely to change in the short term. As a result, there will be an increase in the equilibrium price and quantity of walnuts.

Let D = Demand, S = Supply, P = Equilibrium