📚 Learning Guide
Supply and Demand Analysis
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If a recent study shows that peaches significantly reduce the risk of cancer, leading to a surge in consumer purchases of peaches, what is the likely effect on the supply side of the market for peaches?

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Learning Path

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Choose the Best Answer

A

The supply of peaches will decrease as farmers struggle to keep up with demand.

B

The supply of peaches will increase as farmers are incentivized to grow more.

C

The supply of peaches will remain unchanged regardless of demand.

D

The supply of peaches will become more elastic due to increased consumer interest.

Understanding the Answer

Let's break down why this is correct

Answer

When more people start buying peaches because they believe they can reduce cancer risk, this increases the demand for peaches. As demand goes up, peach farmers and sellers see an opportunity to make more money. In response, they are likely to produce more peaches to meet this new demand, which means the supply of peaches will also increase. For example, if a local farm usually sells 100 peaches a week, they might decide to grow and sell 150 peaches a week to keep up with the increased interest. Overall, the market adjusts by increasing the supply to match the higher demand.

Detailed Explanation

When more people want peaches, farmers see a chance to make more money. Other options are incorrect because Some might think that farmers can't keep up with demand; It's a common mistake to think supply stays the same.

Key Concepts

Supply and Demand Analysis
Market Behavior
Price Determination
Topic

Supply and Demand Analysis

Difficulty

medium level question

Cognitive Level

understand

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