Coffee manufacturers invested heavily in advertising to increase the demand for coffee. The equilibrium price of coffee would .

increase

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decrease

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remain the same

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be ambiguous

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Solution

The correct option is A increase
First of all, advertising adds to the cost of coffee. Hence the supply curve would shift to the left. As a result of increase in demand, the demand curve would shift outwards. As a result of these shifts, the equilibrium price of coffee would increase.

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