Micro2Solutions

Of 33 prep101 wwwprep101comfreestuff use the following

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: of 33 ©Prep101 www.prep101.com/freestuff Use the following information on the quantities demanded and supplied in equilibrium, before and after a pest problem strikes barley farmers, to answer question 3: North South Barley before after 200 60 20 10 Beef before after 100 40 8 100 Oatmeal before after 20 100 100 120 Q3. If barley and oatmeal are substitutes in consumption, in the North there is a) b) c) d) e) An increase in supply of oatmeal An increase in demand for oatmeal An increase in the quantity of oatmeal supplied A decrease in the quantity of oatmeal supplied b) and c) Solution: e) b) and c) Due to the pest problem, the supply of barley decreases the price of barley rises as a result of a leftward shift of the supply curve. Oatmeal is a substitute for barley demand for oatmeal increases The demand curve for oatmeal shifts right the price of oatmeal rises and the quantity of oatmeal supplied increases. Page 2 of 33 ©Prep101 www.prep101.com/freestuff Tony and Martha both can produce good A and B. Use th...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online