Question
Suppose new farming techniques drastically increase the productivity of growing wheat. Short answers are fine, but explain in terms of shifts in supply and demand.
Suppose new farming techniques drastically increase the productivity of growing wheat. Short answers are fine, but explain in terms of shifts in supply and demand.
(a) Given this change, how would the price of wheat change?
(b) Given your answers in (a), how would the price of cookbooks that specialize in recipes using wheat flour change?
(c) Given your answer in (b), how would the price of paper change?
(d) Given your answer in (c), how would the price of pencils change? (Hint: are paper and pencils substitutes or complements?)
(e) Given you answer in (d), how would the quantity of graphite (used in pencils) consumed change?
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