Suppose Canada removes sugar quotas and the market price of sugar drops.If the demand curve for candy bars is downward-sloping,in the candy bar market we would expect the:

Question

Quizplus · Accepted Answer

If the market price of sugar drops, candy bar manufacturers will be able to produce candy bars at a lower cost, which will cause the supply curve of candy bars to shift to the right. As a result, the quantity of candy bars demanded would increase, leading to a decrease in their equilibrium price. This lower price will result in an increase in consumer surplus because consumers will be able to purchase the same quantity of candy bars at a lower price, thus increasing their overall welfare.

Suppose Canada Removes Sugar Quotas and the Market Price of Sugar