3. Changes in resource markets due to changes in technology and other inputs The

Question

3. Changes in resource markets due to changes in technology and other inputs The makers of Jazzy Cola have come to you for advice. A just-invented process promises to make one of their ingredients, which they have creatively labeled Input A to maintain the secrecy of their formula, taste even better than before. Use the graph of the market for Input A to indicate the impact of the new invention Supply of Input A Demand for Input A Supply of Input A Demand for Input A QUANTITY From the graph, you can deduce that the new invention will lead the equilibrium price of Input A to and the equilibrium quantity to

Explanation / Answer

1- now when the taste will be improved the already existing buyer of the products will demand more of the cola, this will lead to more demand of the input A thus demand for input A curve shifts to right,

thus prices of the input A will increase with the increase in quantity in equilibrium of input A

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