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Question
The equilibrium price of teddy bears is $5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen?
a. The price of teddy bears increases to $7 because of a supply shift.
b. The price of teddy bears decreases to $4 because of a supply shift.
c. The price of teddy bears decreases to $4 because of a demand shift.
d. The price of teddy bears increases to $7 because of a demand shift.
e. The price of teddy bears increases to $7 because of both a demand shift and a supply shift.
Answer
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