An increase in the price of sugar (an ingredient for soft drinks)and an increased concern about tooth decay caused by the consumption of soft drinks will result in which of the following in the soft drink market?

Question

Quizplus · Accepted Answer

An increase in the price of sugar (an input) will result in a leftward shift of the supply curve, decreasing the equilibrium quantity. However, increased concern about tooth decay from consuming soft drinks will decrease demand, causing a leftward shift of the demand curve, further decreasing the equilibrium quantity. The effect on equilibrium price is ambiguous, as the increase in the input cost shifts supply to the left, but the decrease in demand shifts it to the right. Therefore, the equilibrium price may decrease, increase, or stay the same. The only certain observation is that the equilibrium quantity will decrease.

An Increase in the Price of Sugar (An Ingredient for Soft