Answer to Question #317487 in Microeconomics for Karabo

Question

A diagram that shows the effect on market of sunflowers caused by the cost of sunflower seeds increased

Answer 1

An increase in the cost of sunflower seeds will result in the suppliers supplying it at a higher price. This will lead to a general increase in the cost of production. Consequentially, the price of buying sunflower will increase in the market. When the price of sunflower increases, it will lead to reduction in the quantity demanded by customers due to high price while the supply of sunflower will be high because the firms wants to make maximum profits. This will lead to surplus in the market without any body to buy the product.