Prices of microbrewery beer (assume that this is a normal good)have risen steadily in recent years.Over this same period, prices for fermenting vats used in beer making have also risen and consumer incomes have fallen.Which of the following best explains the rising prices of microbrewery beer?
A)The supply curve for microbrewery beer has shifted to the left while the demand curve for microbrewery beer has shifted to the right.
B)The demand curve for microbrewery beer has shifted to the left more than the supply curve has shifted to the left.
C)The demand curve and the supply curve for microbrewery beer have both shifted to the right.
D)The supply curve for microbrewery beer has shifted to the left more than the demand curve has shifted to the left.

Question

Quizplus · Accepted Answer

The rising prices of fermenting vats have led to higher production costs for microbreweries, resulting in a leftward shift of the supply curve for microbrewery beer. Additionally, the falling consumer incomes have led to a decrease in demand for microbrewery beer, resulting in a leftward shift of the demand curve for microbrewery beer. However, the demand curve has not shifted to the left more than the supply curve, as the increase in production costs would have a greater impact on the supply curve. Therefore, D is the best answer.

Prices of Microbrewery Beer (Assume That This Is a Normal