Question

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Explanation:

Analyze the market conditions

The scenario describes a new brand of Mediterranean yogurt that has become "very popular" (indicating high demand) but is "still sold at the same price as the regular yogurt" (price is kept below the market-clearing equilibrium price) and is "supplied in very small quantities to stores" (low supply).

Determine the economic outcome

When the demand for a good is high because of its popularity and low price, but the quantity supplied is very small, the quantity demanded exceeds the quantity supplied. In economics, this imbalance at the current price level leads directly to a shortage of that specific product.

Evaluate the given options

• Option 1: "There will be a shortage of the new yogurt because the new yogurt is in high demand." This correctly identifies that the shortage will affect the new yogurt due to high demand exceeding the limited supply.
• Option 2: "There will be an abundance of the new yogurt..." This is incorrect because supply is explicitly stated to be very small.
• Option 3: "There will be an increased demand for regular yogurt..." There is no basis to assume demand for regular yogurt increases; consumers prefer the new popular brand.
• Option 4: "There will be a shortage of the regular yogurt..." The high demand and small supply apply specifically to the new yogurt, not the regular yogurt.

Answer:

• (A) There will be a shortage of the new yogurt because the new yogurt is in high demand. (Correct answer)
• (B) There will be an abundance of the new yogurt because there are alternative yogurt brands.
• (C) There will be an increased demand for regular yogurt because it costs the same as the new yogurt.
• (D) There will be a shortage of the regular yogurt because the new yogurt is in high demand.