Final answer:
With a drought decreasing the supply of cocoa and a health study increasing demand, the cocoa market is likely to see an increase in price. The quantity sold depends on the relative shifts in supply and demand; however, it typically decreases due to the immediate impact of reduced supply. Hence the correct answer is option a.
Step-by-step explanation:
When considering the impact on the cocoa market due to a combination of drought in producing countries and the release of a study highlighting health benefits of cocoa, we can expect two effects. First, the drought would likely reduce the supply of cocoa because it affects the production negatively.
The supply curve on a graph would shift to the left, indicating a decrease in supply at every price level. Second, the new study promoting health benefits would increase consumer demand for cocoa. The demand curve would shift to the right, representing an increase in the quantity demanded at every price level.
The interaction of these two shifts would typically lead to a higher equilibrium price, as the reduced supply and increased demand both push price upwards. As for the equilibrium quantity, it would depend on the relative magnitudes of the shifts in supply and demand. If the increase in demand is more significant than the decrease in supply, the quantity could increase. Conversely, if the decrease in supply is greater, the quantity could decrease. However, in most cases, the quantity tends to decrease as the limitation in supply usually has a very immediate effect.
In summary, we can reasonably conclude that the price will increase due to these combined factors, but the change in quantity will depend on the relative shifts. The correct answer would be option (a): Price increases, quantity decreases, assuming the decrease in supply is relatively significant compared to the increase in demand.