Suppose that currently the market for gluten-free spaghetti is in long-run equilibrium at a price of $3.50

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Suppose that currently the market for gluten-free spaghetti is in long-run equilibrium at a price of $3.50 per box and a quantity of 4 million boxes sold per year. If the demand for gluten-free spaghetti permanently increases, which of the following combinations of equilibrium price and equilibrium quantity would you expect to see in the long run? Carefully explain why you chose the answer you did.

a. A price of $3.50 per box and a quantity of 4 million boxes

b. A price of $3.50 per box and a quantity of more than 4 million boxes

c. A price of more than $3.50 per box and a quantity of more than 4 million boxes

d. A price of less than $3.50 per box and a quantity of less than 4 million boxes

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Economics

ISBN: 978-0134106243

6th edition

Authors: R. Glenn Hubbard

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