If the price of potato’s increases, there will be of potato cheese fries
The correct answer and explanation is:
Correct Answer:
If the price of potatoes increases, there will be a decrease in the supply of potato cheese fries or a decrease in the quantity demanded of potato cheese fries, depending on the context.
Explanation (300 words):
When the price of potatoes, a key ingredient in potato cheese fries, increases, it directly affects the cost of production for any item that uses potatoes as a main input — in this case, potato cheese fries.
There are two main possible economic responses depending on whose behavior we’re analyzing:
1. Producer’s Perspective:
- Higher Input Costs: An increase in the price of potatoes means it becomes more expensive for restaurants or vendors to produce potato cheese fries.
- Reduced Supply: As the cost of making the product rises, some producers may reduce how much they offer for sale. This results in a leftward shift in the supply curve, meaning a decrease in supply of potato cheese fries at the same price level.
2. Consumer’s Perspective:
- Higher Selling Price: To maintain profit margins, sellers may raise the price of potato cheese fries.
- Lower Quantity Demanded: As the price of the fries goes up, some consumers may find it too expensive and buy less or switch to alternatives. This is described as a decrease in quantity demanded, shown as a movement up along the demand curve.
Conclusion:
If the price of potatoes increases:
- Supply may decrease because it’s more expensive to produce fries.
- Demand may also fall if sellers raise prices and consumers respond by buying less.
Ultimately, the market for potato cheese fries will experience reduced availability and/or higher prices, depending on how both producers and consumers react.