Question

Indicate how an increase in tastes for apples will affect the equilibrium price and the equilibrium quantity in the market for applesa. increase; increaseb. increase; decreasec. decrease; decreased. decrease; increase

Answer 1

Answer: Option (a) is correct.

Step-by-step explanation:

Tastes and preferences are the determinants of demand. Any change in the tastes and preferences will lead to shift the demand curve of a market. Therefore, an increase in the tastes for apples means that demand is favorable for the apple market, as a result demand curve shifts rightwards.

Hence, both equilibrium price and equilibrium quantity in the market for apples increases.