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14 February, 22:44

A new rumor sweeps the country that eggs are great diet food and they don't even raise cholesterol levels. At the same time, advances in chicken husbandry increase the number of eggs that can be produced. What happens to the price and quantity of eggs? (hint: both supply and demand are affected)

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  1. 14 February, 22:47
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    Answer: Increase quantity, Change in price cannot be determined.

    Explanation:

    A new rumor sweeps the country that eggs are great diet food and they don't even raise cholesterol levels. This increases the demand for for eggs which shifts the demand curve for eggs to the right.

    At the same time, advances in chicken husbandry increase the number of eggs that can be produced. This will increase the supply of eggs which will shift the supply curve down to the right.

    Both the rightward shift in the demand and the supply curve will raise the quantity sold in the market. But the effect on the price is ambiguous as it depends on the magnitude of shift in the two curves.
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