What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés reduce heart attacks. A) Both the equilibrium price and quantity would increase. B) Both the equilibrium price and quantity would decrease. C) The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. D) The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous. E) The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter8: Understanding Markets And Industry Changes
Section: Chapter Questions
Problem 2MC
Question
What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that
reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists
discovered that lattés reduce heart attacks.
A) Both the equilibrium price and quantity would increase.
B) Both the equilibrium price and quantity would decrease.
C) The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.
D) The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.
E) The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.
Transcribed Image Text:What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés reduce heart attacks. A) Both the equilibrium price and quantity would increase. B) Both the equilibrium price and quantity would decrease. C) The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. D) The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous. E) The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.
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