Glossary
Knowledge Check - Scenario 2
For the following scenario in the soft drinks market, answer the related question using the graphs below.
Scenario 2: The price of high-fructose corn syrup, a sweetener used in soft drinks, increases.
1. Based on Scenario 2, 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. An increase in the price of high-fructose corn syrup, an
important input in the production of soft drinks, would increase the
cost of soft drinks production, decreasing the supply of soft drinks.
The correct answer is Graph 4.
That's correct. An increase in the price of high-fructose corn syrup, an
important input in the production of soft drinks, would increase the
cost of soft drinks production, decreasing the supply of soft drinks.
2. Based on Scenario 2, 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. An increase in the price of high-fructose corn syrup, an
important input in the production of soft drinks, would increase the
cost of soft drinks production, shifting the supply curve to the left.
That's correct. An increase in the price of high-fructose corn syrup, an
important input in the production of soft drinks, would increase the
cost of soft drinks production. The supply curve would shift to the left.
3. Based on Scenario 2, the demand 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 cost of high-fructose corn syrup, an input
in the production of soft drinks, would affect the supply curve for soft
drinks, not the demand curve. The demand curve does not shift.
That's correct. A change in the cost of high-fructose corn syrup, an input
in the production of soft drinks, would affect the supply curve for soft
drinks, not the demand curve. The demand curve does not shift.
4. Based on Scenario 2, 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 2, the equilibrium quantity of soft drinks
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increases. |
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decreases. |
That's incorrect. A decrease in the supply of soft drinks would decrease
the equilibrium quantity of soft drinks.
That's correct. A decrease in the supply of soft drinks would decrease the
equilibrium quantity of soft drinks.