Final answer:
An excellent harvest increases supply shifting the supply curve right, lowering prices. If coffee's health benefits are promoted, demand also rises shifting that curve right. The equilibrium quantity of coffee will definitely increase, although the price effect is ambiguous without knowing the magnitude of shifts. the correct answer is: C) The equilibrium quantity will increase.
Explanation:
When coffee-producing countries experience an exceptionally good harvest, this leads to an increase in supply of coffee. Supply curves typically shift to the right with increased supply, resulting in a new equilibrium price that is lower due to the abundance of coffee available. If, at the same time, a new study is released demonstrating the health benefits of coffee, the demand for coffee will shift to the right as well, because more consumers will want to purchase coffee due to its newly publicized health advantages. This increased demand tends to push the price higher.
The combined effect of both an increase in supply and an increase in demand can lead to an ambiguous outcome on price, because it depends on the extent to which each curve shifts. However, the quantity exchanged in the market will definitely increase, because both an increase in supply and an increase in demand contribute to a larger quantity being sold at equilibrium.
In summary, while the effect on the equilibrium price of coffee can be uncertain and depends on the magnitude of shifts in supply and demand, the equilibrium quantity of coffee will definitely increase in the scenario described. Therefore, the correct answer is: C) The equilibrium quantity will increase.