Answer to Question #323621 in Microeconomics for Bongeka

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 fertilizer, which is used to grow vegetables. Explain how the market for vegetables will be affected

Answer 1

The market for the vegetables will be affected by both the population decrease and increase in the cost of fertilizers for the country C. Population decrease due to the reduced birth rates will lead to a decrease in demand for the vegetables (Dean et al, 2020). This is due to the reduced consumption resulting from the population decrease. The decrease in demand for the vegetables will make the demand curve shift to the left.

The increase in production price will lead to a decrease in quantity demanded (Dean et al, 2020). Therefore, an increase in the costs of fertilizers will increase the costs of producing the vegetables. This will result in a decrease in supply of the vegetables since the producers will be willing to supply fewer vegetables at the equilibrium price.

                Reference

Dean, E., Elardo, J., Green, M., Wilson, B., & Berger, S. (2020). Shifts in Demand and Supply for Goods and Services. Principles of Economics: Scarcity and Social Provisioning (2nd Ed.).