Question

In 2016, after a hundred years of unsuccessful attempts, the Chicago Cubs finally won the baseball World Series. There was a surge in demand for Cubs baseball caps and T-shirts as more people became fans that year. At about the same time there was blight in the cotton fields that reduced the quantity of cotton to make the caps and T-shirts. Describe what the new equilibrium price and quantity is like compared with the prior year’s Cubs caps and T-shirt before the win and the reduced supply of cotton?

A. With the demand shifting to the left, and supply shifting to the right, the equilibrium price and quantity for Cubs caps and T-shirts decreased from 2015.

B. Supply and demand curves have shifted to the right and the equilibrium price and quantity for Cubs caps and T-shirts has increased since 2015.

C. The demand curve shifted to the right, the supply curve shifted to the left, the equilibrium price for Cubs caps and T-shirts increased from 2015 and it is impossible to determine the effect on the quantity.

Answer 1

Ans - C) The demand curve shifted to the right, the supply curve shifted to the left, the equilibrium price for Cubs caps and T-shirts increased from 2015 and it is impossible to determine the effect on the quantity.

Explanation:

Demand will rise and supply will decrease both of these leads to increase in price.

While the effect on quantity is not able to be stated because demand increases should increase quantity while supply shifted to left decrease quantity.