Question

Sugarcane is vulnerable to the cane beetle, which can substantially reduce crop yields. Suppose that a new beetle‑resistant species of sugarcane is developed and productivity increases as a result. Use the terms to identify the effect on each of the related factors.As productivity increases, the price of sugar will ______The quantity demanded for sugar will then ______Given the change in the price of sugar, the price of cookies will ______The price of honey, also used as a sweetener, will ______Responding to changes in the sugar market, the price of textiles will ______Answer Bank A. not change. B. decrease. C. increase

Answer 1

Answer:(1) Decrease (2) Increase (3) Decrease (4) Decrease (5) Not chanhe

Explanation: This tries to describe a free market economy,where price, quantity demanded and quantity supplied are influenced by the market forces. The improved productivity of the Sugarcane which is a major raw material for sugar production is increased,the cost of production of Sugarcane will decrease as productivity increases,the quantity supplied to the market will increase leading to decreased price for all sugar value chain. The price for Honey a sweetener will also decrease responding the increased demand for sugar but the price for textile will not change because it is not a substitute for sugar.

Answer 2

Change in price refers to a situation when the prices for goods are affected due to various external factors during the given period of time, such as productivity and the quantity demanded. The blanks above can be filled as-

• As productivity increases, the prices of sugar will decrease.
• The quantity demanded for sugar will then increase.
• Given the change in price of sugar, the prices of cookies will decrease.
• The prices of honey also used as a sweetener will also decrease.

• Responding to the changes in sugar market, the prices of textiles will not change.

What is a change in price?

Change in price refers to a sudden increase or decrease in prices of commodities due to change in external factors like demand, production techniques, tastes and preferences, government policies, etc.

In the example above, there is an increase in the productivity of sugar by development of a new technique, which has led to changes in price and quantity of sugar and its substitutes.

Prices of substitutes will be decreased to scale the demand due to decrease in the price of sugar. Whereas, there will be no change in the prices of unrelated goods.

Hence, the changes in prices and the quantity demanded due to an increase in the techniques of productivity are as aforementioned.

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