Recent data reveals that the price of balsamic vinegar and the quantity of balsa
ID: 1249504 • Letter: R
Question
Recent data reveals that the price of balsamic vinegar and the quantity of balsamic vinegar consumed have decreased. Which of the following would cause an unambiguous decrease in the quantity of balsamic vinegar?A. A shift to the right in the supply curve for balsamic vinegar and a shift to the right in the demand curve for balsamic vinegar.
B. A shift to the right in the supply curve for balsamic vinegar and a shift to the left in the demand curve for balsamic vinegar.
C. A shift to the left in the supply curve for balsamic vinegar and a shift to the left in the demand curve for balsamic vinegar.
D. None of the above.
Explanation / Answer
The answer has to be C. I would recommend drawing supply/demand curves to help you see what happens when the curve shifts. If the supply curve shifts to the right, price decreases and quantity increases; however, if the demand curve shifts to the right, price increases and quantity increases. So, A would cause an increase in quantity, but we would not know what happened to price (depending on if the shift in supply or in demand was greater). Again, if the supply curve shifts to the right, price decreases and quantity increases; however if the demand curve shifts to the left, price decreases and quantity decreases. So, B would cause a decrease in price, but we would not know what happened to quantity. If the supply curve shifts to the left, price increases and quantity decreases; however, if the demand curve shifts to the left, price decreases and quantity decreases. So, C would cause a decrease in quantity, but we would not know what happened to price. However, since the question only asks which option causes an unambiguous decrease in quantity, this is the correct answer. Hope this helps!
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