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Figure: Shifts in Demand and Supply IV
-(Figure: Shifts in Demand and Supply IV)Use Figure: Shifts in Demand and Supply IV.The figure shows how supply and demand might shift in response to specific events.Suppose the Minister of Health announces that eating chocolate prevents heart disease.Which panel BEST describes how this will affect the market for chocolate?

Question

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

Quizplus · Accepted Answer

The announcement by the Minister of Health is likely to increase the demand for chocolate due to the perception that it prevents heart disease. As a result, the demand curve would shift to the right as shown in Panel (b). This would lead to an increase in both the equilibrium price and quantity of chocolate.

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