Answer to Question #209761 in Economics for Paballo

Question

When the supply of coffee decreases as a result of adverse weather conditions and the demand for coffee increases due to an increase in the preference for coffee, the price of coffee will

•  A. first increase and then decrease as demand decreases with the increase in price.
•  B. decrease.
•  C. increase.
•  D. either increase or decrease.

Answer 1

When the supply of coffee decreases as a result of adverse weather conditions and the demand for coffee increases due to an increase in the preference for coffee, the price of coffee will increase, because both shifts will cause the increase in price.

So, the correct answer is C.