Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₂ (point B). If there is a decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change? A)The equilibrium point will move from B to A. B)The equilibrium point will move from B to C. C)There will be no change in the equilibrium point. D)The equilibrium point will move from B to E.

Question

Quizplus · Accepted Answer

A decrease in the price of fertilizer used on sugar cane will shift the supply curve to the right (SS1U2B12S1U2B0) and a decrease in tastes for sugar-sweetened soft drinks would shift the demand curve to the left (DS1U2B11S1U2B0). The new equilibrium point will be at the intersection of the new supply and demand curves, which is point C. Point B is no longer the equilibrium point.

Figure 3.8 -Refer to Figure 3.8.The Graph in This Figure Illustrates an Figure