Final answer:
After a report indicating the health benefits of grape juice, the market response will generally be an increase in demand leading to both higher prices and increased quantity sold. Therefore, the correct answer to the question of what happens to the market for grape juice is B. Price increases; quantity increases.
Step-by-step explanation:
When a report is published stating that grape juice helps prevent heart disease, this would likely lead to an increase in the demand for grape juice. People who are health-conscious may be more inclined to purchase grape juice due to its potential benefits, which is similar to the increase in demand observed in the cheese and cocoa examples provided.
As demand increases, two main outcomes can be expected in the market: an increase in the price of grape juice because buyers are willing to pay more for these health benefits, and an increase in the quantity of grape juice that suppliers are willing to produce and sell at these higher prices to meet the new demand.
This shift in demand would cause the supply and demand curve to adjust accordingly. In economic terms, when demand increases, the demand curve shifts to the right, which typically results in a higher equilibrium price and a larger quantity sold, provided that the supply remains constant or does not decrease significantly.