Refer to the graph above. Suppose consumers do not know the safety risks associated with a particular good, and that the free-market equilibrium is at E as shown in the diagram above. If an independent agency now provides accurate information about the harmful characteristics of the product, then:
A) The supply curve will shift to the left
B) The supply curve will shift to the right
C) Both the new equilibrium price and quantity will be lower
D) The new equilibrium price will be higher but the equilibrium quantity will be either higher or lower

Question

Refer to the graph above. Suppose consumers do not know the safety risks associated with a particular good, and that the free-market equilibrium is at E as shown in the diagram above. If an independent agency now provides accurate information about the harmful characteristics of the product, then:
A) The supply curve will shift to the left 
B) The supply curve will shift to the right 
C) Both the new equilibrium price and quantity will be lower 
D) The new equilibrium price will be higher but the equilibrium quantity will be either higher or lower

Quizplus · Accepted Answer

The Answer of  Refer to the graph above. Suppose consumers do not know the safety risks associated with a particular good, and that the free-market equilibrium is at E as shown in the diagram above. If an independent agency now provides accurate information about the harmful characteristics of the product, then:
A) The supply curve will shift to the left 
B) The supply curve will shift to the right 
C) Both the new equilibrium price and quantity will be lower 
D) The new equilibrium price will be higher but the equilibrium quantity will be either higher or lower

Refer to the Graph Above