Answer to Question #163363 in Microeconomics for Ramy Joy Morquianos

Question

farmers are deciding what crop to plant and learn that the price of garlic has risen dramatically relative to the price onion. suppose that garlic and onion can be produce by using almost the same resources. predict the effect on the onion market

Answer 1

Farmers will start planting the crop of garlic as it will fetch them higher prices and hence higher profits. According to law of supply, other things being constant, if prices increases then quantity supplied also increases and vice versa.

Effect on onion market,

Farmers will decrease the supply of onions as they are gaining higher prices from the garlic crop