Question

Q. What will happen to the equilibrium price and quantity of French fries in each of the
following cases? You should state whether demand or supply (or both) have shifted and
in which direction. (In each case assume ceteris paribus.) (a) A rise in the price of oil; (b)
A rise in the demand for burgers; (c) A rise in the price of potatoes; (d) An expected rise
in the price of potatoes in the near future; (e) A tax on fries' production; (f) The invention
of a new, but expensive, process for removing all cholesterol from fries plus the passing
of a law which states that all fries producers (like fast food chains) must use this
process​

Answer 1

Answer:

A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.