Glossary
Knowledge Check - Scenario 1
For the following scenario in the soft drinks market, answer the related question using the graphs below.
Scenario 1: The price of iced tea, a soft drinks substitute, increases.
1. Based on Scenario 1, which graph illustrates the change in the soft drinks
market?
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Graph 1 |
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Graph 2 |
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Graph 3 |
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Graph 4 |
That's incorrect. The demand for soft drinks would increase as a result of
an increase in the price of iced tea, a soft drinks substitute. The answer
is Graph 1.
That's correct. The demand for soft drinks would increase as a result of
an increase in the price of iced tea, a soft drinks substitute.
2. Based on Scenario 1, the supply curve for soft drinks
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shifts to the right. |
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shifts to the left. |
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does not shift. |
That's incorrect. A change in the price of iced tea, a soft drinks substitute,
would affect the demand curve, not the supply curve. The supply curve
does not shift.
That's correct. A change in the price of iced tea, a soft drinks substitute,
would affect the demand curve, not the supply curve. The supply curve
does not shift.
3. Based on Scenario 1, the demand curve for soft drinks
|
shifts to the right. |
|
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shifts to the left. |
|
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does not shift. |
That's incorrect. An increase in the price of iced tea, a soft drinks substitute,
would shift the demand curve to the right.
That's correct. An increase in the price of iced tea, a soft drinks substitute,
would shift the demand curve to the right.
4. Based on Scenario 1, the equilibrium price of soft drinks
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increases. |
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decreases. |
That's incorrect. An increase in the demand for soft drinks would increase
the equilibrium price of soft drinks.
That's correct. An increase in the demand for soft drinks would increase
the equilibrium price of soft drinks.
5. Based on Scenario 1, the equilibrium quantity of soft drinks
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increases. |
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decreases. |
That's incorrect. An increase in the demand for soft drinks would increase
the equilibrium price of soft drinks.
That's correct. An increase in the demand for soft drinks would increase
the equilibrium quantity of soft drinks.