Answer to Question #184542 in Microeconomics for belinda

Question

Maize is considered to be an inferior good. Assume that the original demand curve is D1 and the original supply curve is S1.

1.Explain the impact of an increase in the price of lucerne(a substitute in product for maize) on the market.

Answer 1

Impact of an increase in the price of Lucerne may be due to reduction in supply of maize, which makes the consumers to prefer the substitute. Due to increase in the demand of Lucerne, it's price will eventually increase.