Impact on the equilibrium price and quantity

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(1) Use demand and supply analysis to illustrate the impact on the equilibrium price and quantity in the corn market of the following. (Note: assume relatively elastic linear demand and supply curves all questions)

a. The price of wheat goes up.

b. The price of fertilizer goes up.

Bill O'Really of OX News observed that poultry (chicken and turkey) consumption in the US increased dramatically over the 2000 to 2006 period. This he believed was due to the fact that consumers, being more health conscious, switched from red meat to poultry, in an effort to eat healthier foods. Intrigued by these findings, Bill contacted the US Department of Agriculture for additional information. The department provided him with data that yielded two findings. First, there was a 75% decrease in the price of poultry over the period and second, there was widespread adoption of cost reducing innovations in poultry processing. Being a supposedly brilliant journalist, Bill concluded that the demand curve for poultry had shifted to the right.

a. Is Bill's conclusion correct or incorrect? Explain your answer using supply and  demand diagrams.

Reference no: EM131669828

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