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the price of soy beans is expected to decrease. what happens in the market for corn,...

the price of soy beans is expected to decrease. what happens in the market for corn, which is a production substitute for soy beans?
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Answer #1

If the price soya beans is expected to decrease, then the demand for soya beans will increase in the market as quantity demanded is negatively related to price of the product. This will lead to decline in the quantity demanded of the substitute good of soya beans which is corn in this case.

Thus, demand curve of corn will shift leftwards sue to expected decrease in the price of soybeans. This will lead to fall in the price and quantity demanded and supplied of corn.

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