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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
120 Q3. If barley and oatmeal are substitutes in consumption, in the North there is
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...
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This note was uploaded on 08/26/2010 for the course ECON 208 taught by Professor Dickenson during the Fall '07 term at McGill.
- Fall '07