A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in
A)a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price.
B)a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.
C)a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
D)an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.

Question

Quizplus · Accepted Answer

A decrease in demand will decrease the equilibrium quantity, while an increase in supply will decrease the equilibrium price. Therefore, it can be concluded that the equilibrium price of soft drinks will decrease, but the change in equilibrium quantity is uncertain, as it depends on the extent of the decrease in demand and the increase in supply.

A Decrease in the Demand for Soft Drinks Due to Changes