Question

Although New York State is second only to Washington State in production of apples, its production has been declining during the past 30 years. The decline has been particularly steep in counties close to New York City. In 1985, there were more than 11,000 acres of apple orchards in Ulster County, which is 75 miles north of New York City. Today, only about 6,000 acres remain. As it became difficult for apple growers in the county to compete with lower-cost producers elsewhere, the resources these entrepreneurs were using to produce apples – particularly land – become more valuable in other uses. Many farmers sold their land to housing developers. Suppose a nutritionist develops a revolutionary new diet that involves eating 10 apples per day. The new diet becomes wildly popular.

How do I draw the demand/supply diagram for apples and the market for land/housing in this situation? Can you please draw both the initial demand and supply and the shifts in demand and supply for apples and housing?

Answer 1

Sol. :

Effect on demand and supply of apples are as follows :

• As, Apple producer have sold their orchads , which will reduce the supply of apples in the market . And , reduce in supply by factir other than price will shift the supply curve to the left.
• And , when the new diet consisting of apples increases and people have accepted the diet , which will increase the demand for the apples. So, increase in demand means shift of demand curve to the right.

Effect on demand and supply of market of housing :

• As , apples producer sold their orchads to the house developers , this will increase the supply of houses And , increase in supply means shift of supply curve to the right.