Q-6 Suppose that we are studying the market for cornflakes. Suppose further that during the summer...
Q-6 Suppose that we are studying the market for cornflakes. Suppose further that during the summer of 1999 the following events both occur: (1) The weather in the farm belt is extraordinarily hot, with very little rain; and (2) A new research study is published and widely disseminated which proves that eating cornflakes makes people healthier and adds years to their lives. (10) (b) Show how the two events described above will change this market. Can you say what will happen to the equilibrium price in this market? Please explain your answer. Can you say what will happen to the equilibrium quantity in this market? Please explain your answer. (c)