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The lack of rain during the last 36 months has reduced the water level of the Mississippi River and the Ohio River
The lack of rain during the last 36 months has reduced the water level of the Mississippi River and the Ohio River. As a result, the ships and barges that transport farm products along these rivers have reduced their loads and made more frequent trips. This situation can be portrayed as a:
A. Rightward shift of the demand curve for those farm products.
B. Leftward shift of the supply curve of those farm products.
C. Rightward shift of the supply curve of those farm products.
D. Leftward shift of the demand curve for those farm products.
E. Movement up and along the supply curve of those farm products.
Expert Solution
Option B
The Supply curve shift leftward because reducing loads of ship and increase in trips causes an increase in transportation cost of farm products. Thus, the total cost of a farm product increases, that increase in total cost causes a leftward shift in the supply curve.
Other Incorrect Option
a. The given condition only talks about the supply side of the firm products.
c. The supply curve shifts leftward with the increase in the total cost of the firm product. If the total cost
decrease than the supply curve will shift leftward.
d. The given information is not sufficient for demand-side analysis.
e. When price of firm product changes the there is movement along the supply curve.
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