Question

One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal?

Answer 1

The supply will decrease.

Step-by-step explanation:

Tapioca pearls are used as input in bubble tea. If the price of tapioca flour increase, it will lead to an increase in the cost of producing pearls. This will further cause the cost of producing bubble tea to increase.

At the same cost, the firms will be able to produce a lesser quantity. This will cause the supply curve to shift to the left. So, an increase in the price of tapioca pearls causes the supply of bubble tea to decrease.