Final answer:
If the price of an apple pie substitute increases, the demand curve for apple pies would likely shift to the right, leading to a higher equilibrium price and quantity for apple pies. In different market scenarios where production costs are affected by fines or regulations, the supply curve could shift to the left, resulting in a higher equilibrium price.
Step-by-step explanation:
If the price of an apple pie substitute were to increase, we would interpret this as a decrease in supply for the substitute, which in economic terms would likely shift the demand curve to the right for apple pies as they become a more attractive option relative to the substitute. This assumes that apple pies and the substitute are close substitutes in consumption. The result is an increase in both the equilibrium price and quantity for apple pies, as consumers switch their preference towards apple pies.
For the scenarios provided:
- Firms having to pay a fine for carbon dioxide emissions would likely see an increase in production costs, which would shift the supply curve to the left, leading to a higher equilibrium price.
- Companies being sued for polluting could face similar outcomes as fines and legal costs potentially increase operation costs, shifting supply to the left.
- Power plants not required to address air quality emissions would maintain their production costs, and their supply curve would remain unchanged.
- Companies required to clean up from fracking would face increased costs, likely shifting the supply curve to the left and increasing the equilibrium price.
Each of these scenarios could impact the equilibrium price and potentially result in a change in market dynamics, with a shift to the left in the supply curve typically resulting in a higher equilibrium price.
Answer: b) Shift to the right