Answer to Question #319796 in Microeconomics for Assy

Question

The population in country C decreases due to a lower birth rate.at the same time there is an increase in the cost of fertiliser which is used to grow vegetables.explain how the market for vegetables will be affected by these change.clearly indicate how the equilibrium price and equilibrium quantity will be affected by these change make use of a combination of diagrams and verbal explanation to explain your answer

Answer 1

A decline in population will result in a shift in demand curve inwards or to the left. An increase in the price of fertilizer has an effect on the amount of supply to the market as farmers will not be able to afford what they could afford before the prices increased and hence a shift in the supply curve inwards also.

The end result of the shifts is a negligible drop in price and a more than reduction in quantity demanded.

This can be explained in the below diagram