Answered: a. Butter and toast are often consumed…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 10PA

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a. Butter and toast are often consumed together. Both the equilibrium price of toast and the equilibrium quantity of butter have risen. What could be responsible for this pattern—a fall in the price of milk or a fall in the price of flour? Illustrate your answer on the curve and explain your answer.

b.Suppose instead that the equilibrium price of toast has risen but the equilibrium
quantity of butter has fallen. What could be responsible for this pattern—a rise
in the price of milk or a rise in the price of flour? Illustrate your answer on the curve and explain your
answer.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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