What must raise the price of peaches

When two things change at once, ask what each does to the price on its own. If both push the price the same way, the result is certain. If they push in opposite directions, the answer depends on which shift is bigger, so it is not certain.

In the first pair, higher wages for farm workers raise the cost of growing peaches, so supply shifts left and price rises. The news that peaches lower cancer risk makes buyers want more at every price, so demand shifts right and price rises again. Both shifts raise price, so the price of peaches must go up.

Every other choice either lowers price for certain or mixes a rise with a fall.

Each choice

• A (correct). A supply decrease and a demand increase both push price up, so the rise is certain whatever their sizes.
• B. Cheaper labor shifts supply right, which lowers price, while the ad campaign shifts demand right, which raises it. A student who sees only the demand side picks this, but the net effect on price is unknown.
• C. Better technology means more peaches from the same resources, so supply shifts right and price falls. Thinking of new technology as an added cost points the wrong way.
• D. Apples and oranges are substitutes for peaches. When they get cheaper, some buyers switch away from peaches, demand for peaches falls, and so does their price.
• E. Ideal weather means a larger harvest, so supply shifts right and the price drops. This mixes up a good growing season with a higher price.