Question

Christmas card sales increase during the last three months of the year, and the sale of fresh strawberries in the North increase during the early summer months. However, the equilibrium price movement of these two commodities is quite different during their peak sale seasons. Christmas cards increase in price when the equilibrium quantity increases, whereas, strawberries decrease in price when the equilibrium quantity increases. Why does this difference occur?a. demand for Christmas cards increases; supply of strawberries increasesb. demand for Christmas cards increases; supply of strawberries decreasesc. demand for Christmas cards decreases; supply of strawberries increases

Answer 1

Answer:

A. Demand for Christmas cards increases; supply of strawberries increases

Explanation:

The two figures attached show that in the Christmas cards market if the total demand increases (the demand curve shift to the right) then the equilibrium price and quantity will increase. In the strawberries market if the total supply increases (the supply curve shifts to the right) then equilibrium quantity increases but the equilibrium price decreases.  

It is not option B because when supply decreases (the supply curve shifts to the left) the eq. price increases and eq. quantity decreases. It is not option C because if demand decreases (the demand curve shifts to the left) then the eq. price decreases and the eq. quantity decreases too.