Suppose that a natural disaster substantially increases the cost of producing cheese.We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________.

Question

Quizplus · Accepted Answer

The increase in the cost of producing cheese will cause a leftward shift in the supply curve, resulting in a decrease in the equilibrium quantity of cheese. At the same time, since the cost of production has increased, sellers will have to charge a higher price to cover their costs, which will cause an increase in the equilibrium price of cheese. Therefore, the correct answer is C.

Suppose That a Natural Disaster Substantially Increases the Cost of Producing