What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that coffee prevents heart attacks?
A)Both the equilibrium price and quantity would increase.
B)Both the equilibrium price and quantity would decrease.
C)The equilibrium price would increase,and the effect on equilibrium quantity would be ambiguous.
D)The equilibrium quantity would increase,and the effect on equilibrium price would be ambiguous.

Question

Quizplus · Accepted Answer

The machine reduces production costs, increasing supply, while the health benefit discovery increases demand. The equilibrium quantity will increase, but the effect on price is uncertain due to opposing supply and demand shifts.

What Would Happen to the Equilibrium Price and Quantity of Lattés