The market for chewing gum is in equilibrium with a current price of 50 cents per pack and a quantity of 100,000 packs per day.Which of the following events is most likely to result in a new equilibrium price of 75 cents and a new equilibrium quantity of 125,000 packs,if the supply curve for chewing gums remains unchanged?

Question

Quizplus · Accepted Answer

An increase in the price of other kinds of candy would likely cause consumers to substitute towards chewing gum, increasing the demand for chewing gum. This would shift the demand curve to the right, leading to a higher equilibrium price and quantity, assuming the supply curve remains unchanged.

The Market for Chewing Gum Is in Equilibrium with a Current