Question

This question is based on the following information for ice cream: At the same time that a decrease in demand for ice cream occurs during the wintertime, a new supplier enters the market which increases the supply of ice cream. From these events, we can predict that

•  A. the equilibrium price and the equilibrium quantity will be higher.
•  B. the equilibrium price will be lower while the change in equilibrium quantity is uncertain.
•  C. the equilibrium quantity will be higher while the change in equilibrium price is uncertain.
•  D. the equilibrium price will be higher while the change in equilibrium quantity is uncertain.

Answer 1

B. the equilibrium price will be lower while the change in equilibrium quantity is uncertain.