The exhibit shows how supply and demand might shift in response to specific events. Suppose the Surgeon General announces that eating chocolate prevents heart disease. Which panel best describes how this will affect the market for chocolate?

a. Panel (a)

b. Panel (b)

c. Panel (c)

d. Panel (d)

The correct answer is c. Panel (c)

Explanation:

Demand is defined as the quantity of some product that a consumer is willing and able to buy at a given price. This suggests at least two factors, in addition to the price, that affect demand. The willingness to buy suggests a desire, based on what economists call tastes and preferences. If you don't need or want something, you don't buy it. Buying capacity indicates that income is important. Generally, teachers can afford better housing and transportation than students because they have more income. The prices of related goods can also affect demand. If you need a new car, the price of a Honda can affect your demand for a Ford. Finally, the size and composition of the population can also affect demand. The more children a family has, the greater their demand for clothing will be. The more children of driving age a family has, the greater their demand for car insurance, and the lower the demand for diapers and baby milk.