Health warning shifts demand left for fizzy drinks, reducing derived demand for sugar

Steps:

• Warning changes tastes, shifting fizzy drinks demand curve left at every price.
• New equilibrium lowers price and quantity of fizzy drinks, moving down along existing supply curve.
• Less fizzy drink production reduces input demand for sugar, shifting sugar demand curve left.
• Lower sugar price prompts suppliers to expand output to other markets, shifting sugar supply curve right.

Why B is correct:

• B matches law of supply: falling sugar price increases quantity supplied, shifting supply right to restore equilibrium.

Why the others are wrong:

• A incorrectly shows demand left but supply movement up, implying higher price contrary to demand decrease.
• C wrongly suggests upward demand movement (higher consumption) and left supply shift, ignoring preference change.
• D misstates demand movement without shift and left supply for sugar, violating derived demand reduction.

Final answer: B