In the market for chewing gum,the current price is 50 cents per pack and 100,000 packs are sold.Which of the following events is most likely to result in a new equilibrium price of 60 cents and quantity of 90,000 packs?

Question

Quizplus · Accepted Answer

Option B, an increase in the price of the ingredients used to make chewing gum, is most likely to result in a new equilibrium price of 60 cents and quantity of 90,000 packs. With the increase in the price of ingredients, the cost of production of chewing gum will increase. To maintain the same profit, producers will need to increase the price of the gum, resulting in a new equilibrium price. The decrease in demand due to the increase in price will lead to a decrease in the quantity of gum sold, resulting in a new equilibrium quantity. Therefore, option B is the best choice.

In the Market for Chewing Gum,the Current Price Is 50