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


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.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.