Answer to Question #252584 in Microeconomics for mimichat

Question

If caesars salads become trendy at dinner parties. The dressing is made with butter. What is likely effect on the market for butter. Indicate in each case the impact on equilibrium price and equilibrium.

Answer 1

An increase in demand of caesars salads will increase the demand for butter. This increase in demand will increase the equilibrium price of the product. When the equilibrium price increases, producers are motivated to produce more of the product, which will lead to an increase in equilibrium quantity.