Suppose that an increase in the price of vegetable oil


Consider the markets for butter (B) and margarine (M), where the demand curves are 765_9e184ff0-225c-49fc-9834-4a15e04fb532.png

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a) Find the equilibrium prices and quantities for butter and margarine.

b) Suppose that an increase in the price of vegetable oil shifts the supply curve of margarine to How does this change affect the equilibrium prices and quantities for butter and margarine? Using words and graphs, explain why a shift in the supply curve for margarine would change the price of butter.

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Econometrics: Suppose that an increase in the price of vegetable oil
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