4.9 For years, Chinese parents bought imported baby formula because of their concerns about the safety of domestic formula. However, in 2013, a major for- eign producer announced that its concentrate might contain botulism. In 2014, the Chinese government yanked production permits for a third of the coun- try's infant formula manufacturers due to safety concerns. Many worried parents stopped buying any formula. The price of formula rose from 350 to 450 yuan (the Chinese currency). Use a supply- and-demand diagram to explain why the price rose. Show the effect on equilibrium quantity.

4.9 For years, Chinese parents bought imported baby formula because of their concerns about the safety of domestic formula. However, in 2013, a major for- eign producer announced that its concentrate might contain botulism. In 2014, the Chinese government yanked production permits for a third of the coun- try's infant formula manufacturers due to safety concerns. Many worried parents stopped buying any formula. The price of formula rose from 350 to 450 yuan (the Chinese currency). Use a supply- and-demand diagram to explain why the price rose. Show the effect on equilibrium quantity.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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