A terrible storm wipes out 70 percent of the peanut crop. Explain and show graphically how this will affect the market for peanut butter and the market for jelly, a complementary good
Higher peanut prices will shift the supply curve for peanut butter to the left (a decrease in supply). A higher price and a lower quantity demanded will result. The demand for jelly will decrease in response to higher peanut butter prices. This leftward shift in the demand curve will reduce the price of jelly and the quantity supplied.
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An increase in the domestic interest rate causes the demand for domestic assets to ________ and the domestic currency to ________, everything else held constant
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate
The simplest device to analyze dynamic decisions is a
A) one-period model. B) two-period model. C) model that includes only the number of years of a typical consumer's lifetime. D) continuous time model.