Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would
A)decrease demand and decrease supply,resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes.
B)increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes.
C)decrease demand and increase supply,resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes.
D)decrease demand and increase supply,resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes.

Question

Quizplus · Accepted Answer

The increase in tobacco harvest would result in an increase in supply of cigarettes, while the studies showing the health risks of smoking would decrease demand for cigarettes. This would lead to a decrease in the equilibrium price of cigarettes (due to the increase in supply) and an uncertain effect on the equilibrium quantity (due to the decrease in demand potentially offsetting the increase in supply). Therefore, the best choice is C.

Studies Have Shown That Smoking Cigarettes Can Cause Heart Disease