Thank you for visiting If consumers often purchase muffins to eat while they drink their lattés at local coffee shops what would happen to the equilibrium price and quantity. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Answer:
Both quantity demanded and price will increase for lattes
Explanation:
When two goods or services are purchased and consumed together, it is known as complementary goods. For example, socks and shoes, or a phone and headphones. Complementary goods tend to have an inverse relationship. i.e. when the price of one good falls, the demand for the other increases. This can be explained further using the example provided in the question...
When the price of muffin falls, it makes them cheaper, causing a downward movement in the demand curve. When this happens, the quantity of muffins purchased will increase. Therefore, more lattes would be required to consume with the muffins. This will lead to a shift in the demand curve from left to right from D1 to D2 (refer diagram). The quantity demanded will increase from QD1 to QD2 and price will increase from P1 to P2.
It is important to note one thing. A change in price of a product will always cause a movement along the demand curve. A change in any factor other than price will cause a shift in the demand curve :)
Thank you for reading the article If consumers often purchase muffins to eat while they drink their lattés at local coffee shops what would happen to the equilibrium price and quantity. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!
- You are operating a recreational vessel less than 39 4 feet long on federally controlled waters Which of the following is a legal sound device
- Which step should a food worker complete to prevent cross contact when preparing and serving an allergen free meal A Clean and sanitize all surfaces
- For one month Siera calculated her hometown s average high temperature in degrees Fahrenheit She wants to convert that temperature from degrees Fahrenheit to degrees
Rewritten by : Jeany
Final answer:
The fall in the price of muffins is expected to cause an increase in demand for lattes, resulting in a rightward shift of the demand curve for lattes and leading to a higher equilibrium price and quantity for lattes.
Explanation:
If the price of muffins falls, this would likely lead to an increase in demand for lattes since consumers often purchase them together. An increase in demand for lattes would cause the demand curve for lattes to shift to the right. According to the law of demand and the law of supply, when there's an increase in demand without a change in supply, the equilibrium price and quantity of lattes will both rise. The reason is that with higher demand, consumers are willing to pay more for lattes, and coffee shops are likely to respond to the increased demand with a higher price, resulting in an equilibrium where more lattes are sold at a higher price.
For example, if we consider a hypothetical scenario where lattes are initially in equilibrium at $4 with 200 million pounds being demanded and supplied, and the demand curve shifts to the right due to a decrease in the price of muffins, the new equilibrium price might increase to $5, with a new equilibrium quantity of 250 million pounds of lattes sold monthly. These numbers are illustrative and the actual change in equilibrium would depend on the magnitude of the shift in the demand curve.
