What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount

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What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount

of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that coffee prevents heart attacks?a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.d. The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.

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1 answer:

Scilla [3.5K] · Answer 1 · 2026-04-02T10:46:15+03:00

Answer: D. The equilibrium quantity would rise, while the effect on equilibrium price would be uncertain.

Explanation: The quantity of latte produced would escalate as the newly introduced machine decreases labor needs and enhances efficiency. Consequently, larger quantities of lattes will be generated in shorter durations. Similar effects would occur if it is found that the coffee used in making lattes prevents heart attacks.

In both scenarios, the quantity at equilibrium grows. However, the equilibrium price's impact is less clear, as the revelation that coffee helps prevent heart conditions could lead to higher latte prices since suppliers would want to benefit from this knowledge, whereas the introduction of machines may cause prices to drop because of increased production scale.