Answer to Question #48688 in Economics for Morongwa

Question

explain and show graphically how this market would beaffected if there is an increase in the number of dairy farmers that produce hormone-free milk and at the sametime south african consumerschose to bemore healthy

if theincome elasticity of demand for hormone-free milk is estimated at +5.0 briefly define what this value means and what it implies about natureof the product

Answer 1

If there is an increase in the number of dairy farmers that produce hormone-free milk and at the same time South African consumers chose to be more healthy, both demand and supply will increase, so the equilibrium quantity will rise, but the change in price is uncertain without the more detailed data.
If the income elasticity of demand for hormone-free milk is estimated at +5.0, we can observe positive income elasticity of demand, which is associated with normal goods, an increase in income will lead to a rise in demand.