A farming cooperative allocates a fixed, finite acreage of fertile land to the cultivation of either malting barley or milling wheat. These two crops are in competitive supply. A sudden surge in global demand for malting barley causes its market price to rise significantly.
Which of the following correctly describes the resulting adjustment in the market for milling wheat?
A leftward shift of the supply curve for milling wheat, resulting in a higher equilibrium price and lower equilibrium quantity.
A rightward shift of the supply curve for milling wheat, resulting in a lower equilibrium price and higher equilibrium quantity.
A leftward shift of the demand curve for milling wheat, resulting in a lower equilibrium price and lower equilibrium quantity.
A rightward shift of the demand curve for milling wheat, resulting in a higher equilibrium price and higher equilibrium quantity.
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.