Answer to Question #318118 in Microeconomics for Ta.nii

Question

The population in the country C descreases, 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 by the changes. Explain how the equilibrium price and equilibrium quantity will be affected by these changes

Answer 1

Decrease in population (labor) and increase in prices of fertilizer translates to increased cost of production thus reduced supply and increased price for vegetables,the supply curve shift upward and left,on other hand due to increase of prices and decrease of consumers(population decrease) the quantity of vegetables demanded decreases and the demand curve shift to left,therefore this indicates the decrease in equilibrium quantity and increase in equilibrium price.