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what would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose? select one: a. price will fall and the effect on quantity is ambiguous. b. quantity will fall and the effect on price is ambiguous. c. quantity will rise and the effect on price is ambiguous. d. price will rise and the effect on quantity is ambiguous.

User Rrvasanth
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Final answer:

The effect of rising wages of coffee-bean pickers and the rising price of tea on the equilibrium price and quantity of coffee is uncertain.

Step-by-step explanation:

The effect of the rising wages of coffee-bean pickers and the rising price of tea on the equilibrium price and quantity of coffee is as follows:

If the wages of coffee-bean pickers rise, it would increase the cost of producing coffee. This would cause the supply curve of coffee to shift to the left, resulting in a decrease in the quantity of coffee supplied. However, the effect on the equilibrium price of coffee is ambiguous, as it would depend on the magnitude of the supply shift and the elasticity of demand for coffee.

On the other hand, if the price of tea rises, it would increase the price of a substitute for coffee. This would result in a decrease in the demand for coffee. Again, the effect on the equilibrium price of coffee is ambiguous, as it would depend on the magnitude of the demand shift and the elasticity of demand for coffee.

Based on these factors, it is not possible to determine with certainty how the equilibrium price and quantity of coffee would be affected by the rising wages of coffee-bean pickers and the rising price of tea. The effect on price could be either a rise or a fall, and the effect on quantity could be either a rise or a fall.

User Jim Black
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