Question

Consider the following events: Scientists reveal that eating oats can result in glowing skin and healthy hair, and at the same time, wages (i.e., the price of labour) for the oat production rise.
(a) Illustrate and explain what effect these changes have on the equilibrium price and quantity of oats. (7 marks)
(b) Critically evaluate what will happen to the oat farmers’ total revenue. (3 marks)

Answer 1

verrben Paga No. Dite: 1201 seeueal that Siemhists tusult Lating skin and haltiy 0ats Cam in thaie damamd This ebult will iavrease the for ats A+ tixne the uages (ie, the ame peice of labeur ) for oduction 0at the This imuuasl in the duniase ise tost will the Aupply for th pouible rusult demramd amd the (a) outcernes that ulabive dipinding Am the the cgnilsleiend 4m all but the will toses aut Aatk ambiguas om the rise atity peuible be giutn as dit the autcemus theree Aubitarthaly whem dimamd inueases ase I- uhile bupply fall just a ittle Prscs Spantty

(Date 1 1201 this case E to E. riles p to P amd equlibrumuatity om 9 to '. bulun Aubatardially Aupply talls Laises just Case TI wham damand while a dittla Price P 71 epitibriu ui! thift frem fren apidsberieres poele il soue 4n this sabe E to E P to wthan beth Aup tall amd faparsion Case TL dumand mreare

Eversreen Paga No. Date: 1201 Prucs nly price uull ise this case P to Pi tauilibesbo uantty chamye (6b) will mat will imuase Oat farmte tatal unemue Juaabity has Iolu to ilibariuna decrease as Case 工 iaureased eluuase im Case amd ll ramain ame