Answered: Suppose you are a peanut farmer, and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose you are a peanut farmer, and this year, there is a drought that harms the peanut crop. Working with your group, discuss the likely impact on the peanut market as a result of the drought, including the impact on equilibrium.

Expert Solution

Step 1

Market demand for a commodity can change as a result of a change in consumers income, their tastes and preferences, the price of related goods and the number of consumers in the market.

The market supply curve of a commodity can shift as a result of a change in technology, government regulations, taxes and subsidies, input costs and with changes in weather conditions for agricultural products.

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