No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

Basic Economic Concepts (7 of 10)

Question 7:
Suppose that the government issues a report stating that consuming bottled water increases the chances of falling ill. What will happen to market price and quantity?

A.  Price increase; Quantity increase
B.  Price increase; Quantity decrease
C.  Price indeterminate; Quantity decrease
D.  Price decrease; Quantity decrease

Scroll down for correct answer

Correct answer: D, Price decrease; Quantity decrease. Decrease in consumer tastes and preferences would cause the demand to shift left (Price decrease; Quantity decrease).