1. The link between resource and product markets The...

1. The link between resource and product markets The following graph depicts the market for cherries in a hypothetical economy. Suppose that a medical study suggests that eating cherries can limit the risk of cancer. Assuming all other things are constant, show the effect of this medical study on the market for cherries by shifting one or both of the curves in the following graph. PRICE (Dollars per ton of cherries) The Market for Cherries QUANTITY (Tons of cherries) $1 $2 D2 D1 Demand Supply

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00:01 Okay, so for this question, partly asked, would the apple producer assuming the apples and bananas are substitutes or complement? so basically, based on the logic of the apple producer, say that apples and bananas are substitutes, because the lower price of banana leads people to substitute away from buying apples and towards buying bananas.

00:25 That's the logic of this producer.

00:27 So basically, he was assuming apple, and bananas their substitutes.

00:32 And part b say that if a tariff is applied on the banana side and the lead to increase in the cost of supplying bananas in the united states, how would we change of a quiborum of banana and apple in the united states? so first thing, let's draw the graph for the banana.

00:54 So this is quantity and this is price.

00:57 Let's originally draw a demand curve and a supply curve.

01:02 Okay, so because the tariff is applied, so this is, let's say, supply is no tariff case.

01:08 And if there's a tariff applied to this, this is banana market.

01:14 This is for banana.

01:17 Banana.

01:21 Okay, so this is for banana market.

01:23 So because there's a tariff applied to the banana market, so that means there will be some increase in the supply cost.

01:29 So as a result, we will see a supply de -cruz.

01:33 So this is supply curve with tarum...

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