Suppose that the National Institute for Health has announced that they have conclusive evidence that the antioxidants in dark chocolate reduce heart problems. You observe that even though the price of dark chocolate has increased dramatically, many more people are eating dark chocolate. So, you conclude that

Group of answer choices

People who eat dark chocolate do not understand economics.

New information can change the shape of demand curve and make it upward sloping.

There are exceptions to the law of demand

Increase in price is because of increase in demand for dark chocolate.

1 answer

Based on the scenario you've described, where the price of dark chocolate has increased dramatically yet the quantity consumed has also risen due to new information about its health benefits, the most appropriate conclusion would be:

Increase in price is because of increase in demand for dark chocolate.

This conclusion aligns with the principle that a rise in demand for a product can lead to an increase in its price, even if the law of demand typically states that higher prices lead to lower quantities demanded. In this case, the positive health news about dark chocolate has shifted the demand curve to the right, leading to both higher demand and higher prices.