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Fact 3.5.1
The market for coffee is initially in equilibrium.Pepsi is a substitute for coffee;cream is a complement of coffee.Consider the market for coffee.Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1.If there is an increase in the wages of farm workers who harvest coffee beans,the equilibrium quantity of coffee
A)increases.
B)decreases.
C)remains the same.
D)increases or decreases depending on the slope of the supply and demand curves.
E)increases or decreases depending on the relative shifts of the supply and demand curves.

Question

Quizplus · Accepted Answer

An increase in the wages of farm workers who harvest coffee beans would increase the production cost of coffee, leading to a decrease in the supply of coffee. With demand remaining constant, this would result in a decrease in the equilibrium quantity of coffee.

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