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Question
Macroeconomics
Posted about 1 month ago

Brown sugar is an ingredient used to make churro waffles.
What happens to the price and quantity of churro waffles if the price of brown sugar decreases?

Choose 1 answer:
(A) Price increases; quantity increases.
(B) Price increases; quantity decreases.
(c) Price decreases; quantity increases.
(D) Price decreases; quantity decreases.
(E) Price increases; quantity does not change.
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Answer from Sia
Posted about 1 month ago
Solution
a
Input Cost and Supply: When the price of an input (brown sugar) decreases, the cost of production for churro waffles decreases
b
Supply Curve Shift: A decrease in production costs shifts the supply curve to the right, indicating an increase in supply
c
Equilibrium Price and Quantity: With an increased supply, the equilibrium price of churro waffles decreases, and the equilibrium quantity increases
Answer
(C) Price decreases; quantity increases.
Key Concept
Input Cost and Supply Curve
Explanation
A decrease in the price of brown sugar reduces production costs for churro waffles, leading to an increase in supply. This shifts the supply curve to the right, resulting in a lower equilibrium price and a higher equilibrium quantity.

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