Question

Consider the market for wheat. For each of the cases below state with a reason whether demand and/or supply would change and what would happen to the equilibrium price and quantity of wheat as a result. Fully explain your decision including any assumptions you make. You do NOT need to draw diagrams for this question but fully explain your answers

                                                                                                   

1.        A fall in the price of corn

2.        A fall in the price of sugar

3.        An expected lowering in the price of wheat in the future due to ongoing excellent global growing conditions

4.        The creation of wheat specific fertiliser.

5.        Explain the possible non-price determinants involved in a change

           in both the demand and supply for wheat and a substitute grain.

Answer 1