Suppose that there is an announcement that chocolate causes cancer. What would happen to equilibrium price and quantity in the market for Godiva chocolate

Respuesta :

Answer:

Equilibrium price and quantity will fall

Explanation:

An announcement that chocolate causes cancer is a negative news for Godiva chocolate. As such, demand for the item will fall as consumers reduce their consumption of the item. This will push down equilibrium quantity.

Given the fall in quantity demanded, equilibrium price will consequently fall as producers will reduce price in an attempt to stabilize demand for the item.