Question

pal ----lo Here is a supply and demand curve for the market for Wolf Cola in equilibrium. Let's Suppose consumers become more health conscious. Which factor that shifts supply and demand that we learned about does this change fall under? Upload a word document describing what would happen to price and quantity in a few sentences and include a graph showing the shift and the new equilibrium.

Answer 1

Wolf Coal is a sift drink.

Soft drinks are not considered good for health due to ttheir high sugar content and very low nutritional value.

It has been stated that consumers have become more health concious.

This implies that consumers' taste has changed in favorable manner for health promoting food and drinking items.

So,

The taste and preference factor affecting demand has changed.

With consumers becoming more health concious, they will reduce their consumption of Wolf Cola.

This will lead to decrease in demand for Wolf Cola and the demand curve for Wolf Cola will shift to the left.

Following is the required figure -

- - Q1 Q*

The demand curve for Wolf Cola has shifted leftward from D to D1.

The new equilibrium is attained at point E1.

The new equilibrium price is P1 and the new equilibrium quantity is Q1.

Thus,

The price and quantity has decreased.