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Question
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut butter is good for the heart. Holding all other factors constant, which of the following scenarios could happen?
a. The price of peanut butter increases to $7 because of a supply shift.
b. The price of peanut butter decreases to $4 because of a supply shift.
c. The price of peanut butter decreases to $4 because of a demand shift.
d. The price of peanut butter increases to $7 because of a demand shift.
e. The price of peanut butter increases to $7 because of a demand and a supply shift.
Answer
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