if-the-demand-for-coffee-increases-what-happens-to-the-equilibrium-price-and-qua

Question

If the demand for coffee increases, what happens to the equilibrium price and quantity, and how does the market adjust back to long run equilibrium?

Accepted Answer

Price and quantity increase; new firms enter, increasing supply until price returns to original level.

Answer

Price increases and quantity decreases; firms exit, reducing supply.

Answer

Price decreases and quantity increases; firms exit, reducing supply.

Answer

Price and quantity decrease; firms enter, increasing supply.