As more people start to buy coffee due to a sudden drop in temperatures, what effect does this have on the coffee market?

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Prepare for the ASU ECN212 Microeconomic Principles Exam 1. Study with multiple choice questions and detailed explanations. Ace your exam!

The situation described involves a change in demand for coffee due to a drop in temperatures. When more people begin to purchase coffee in response to colder weather, this constitutes an increase in demand. According to the principles of microeconomics, an increase in demand typically shifts the demand curve to the right.

In this scenario, while we can be certain that the quantity of coffee demanded will increase due to rising consumer interest, the effect on price can be less predictable. If the supply of coffee remains constant, the increased demand will likely lead to a rise in price. However, if there are constraints in supply (such as a limited supply of coffee beans or production limits), the price might not increase as expected. Therefore, the outcome for price can be considered ambiguous in this context.

Thus, the correct answer indicates that while quantity increases as more consumers seek coffee, the price response is uncertain because it depends on the dynamics of supply and demand interplay in the market. This combination of certainty about quantity and ambiguity regarding price reflects real-world market behaviors following shifts in consumer preferences.

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