Answer to Question #124903 in Economics for Laveeza rehan

Question

Q2) In Ghana local farmers manage small plots of land for subsistence farming. However, some have benefited by selling pineapples at an agreed, fixed price to an exporter. The exporter provides finance, training fertilizers and machinery and even building materials for the farmers house.

In 2005, European supermarkets changed their mind to a new sweeter pineapple not grown in Ghana. Use demand and supply diagram to explain what happened in the markets of both types of pineapples.

Answer 1

Nothing has changed in the European market, because pineapple and sweet pineapple substitute each other. In Ghana market the demand decreased, because the farmers do not grow new sweet pineapple and the demand for their pineapple decreased.