📚 Learning Guide
Supply and Demand Analysis
medium

If wages for peach farm workers increase while studies show peaches have health benefits, what is the likely market impact?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Supply decreases and demand increases

B

Supply increases and demand decreases

C

Both supply and demand increase

D

Both supply and demand decrease

Understanding the Answer

Let's break down why this is correct

Answer

If wages for peach farm workers increase, it may lead to higher production costs for peach farmers. When it costs more to grow peaches, farmers might produce fewer peaches because they want to keep their profits stable. At the same time, if studies show that peaches have health benefits, more people may want to buy them, increasing demand. This combination of lower supply and higher demand could lead to higher prices for peaches in the market. For example, if a farmer used to sell peaches for $1 each but now needs to raise the price to $1.

Detailed Explanation

When workers earn more, they can produce fewer peaches because it costs more to hire them. Other options are incorrect because This option suggests that more peaches will be made, but higher wages can make it harder to produce them; This choice says both supply and demand will go up.

Key Concepts

Supply and Demand Analysis
Market Equilibrium
Price Elasticity
Topic

Supply and Demand Analysis

Difficulty

medium level question

Cognitive Level

understand

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