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Figure: Shifts in Demand and Supply IV
-(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel BEST describes how this will affect the market for chocolate?
A)panel A
B)panel B
C)panel C
D)panel D

Question

Use the following to answer questions :
Figure: Shifts in Demand and Supply IV 
-(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel BEST describes how this will affect the market for chocolate?
A)panel A 
B)panel B 
C)panel C 
D)panel D

Quizplus · Accepted Answer

The announcement by the Surgeon General that eating chocolate prevents heart disease would increase the demand for chocolate as people would perceive it as a healthier option. This would cause a shift in demand from D1 to D2, resulting in a new equilibrium point at a higher quantity (Q2) and a higher price (P2). This shift in demand is depicted in Panel B.

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