Question

Suppose the market for Coffeecicles (frozen lattes on a stick) is in equilibrium. Further suppose that the market experiences supply disruptions of their sticks (what they call "handheld cold coffee receptacles") because of a rare and invasive species of wood boring beetles in north American poplar trees. What will happen to price and quantity in the market?

A. Supply will decrease and quantity demanded will increase.
B. Supply will increase and quantity demanded will decrease.
C. Supply will increase and quantity demanded will increase.
D. Supply will decrease and quantity demanded will decrease.

Answer 1

In the market for Coffeecicles, supply disruptions due to wood boring beetles will cause a decrease in supply and an increase in price, resulting in a decrease in quantity demanded.

Step-by-step explanation:

In the given scenario, the supply disruptions of the Coffeecicle sticks due to the invasive species of wood boring beetles will cause a decrease in supply. This means that there will be a decrease in the number of Coffeecicles available in the market. Considering the law of demand, when there is a decrease in supply, the price of Coffeecicles is likely to increase, and the quantity demanded will decrease. Therefore, the correct answer is D. Supply will decrease and quantity demanded will decrease.