Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 20 - Agriculture: Economics and Policy - Review Questions - Page 463: 1

Answer

Large increase

Work Step by Step

The supply of olive oil is fixed for the year and the demand is highly inelastic which suggests that for a high change in price, there is not much effect on the quantity demanded. Since there is a shortage of corn oil and people do not have a choice to choose a substitute good, the demand for olive oil increases substantially which results in a large increase in the price of olive oil.
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