Assume that the market for farmland in the fruit- growing region of southwestern Ontario is perfectly competitive. Which of the following will shift the demand curve for this land to the left?
1) a decrease in demand for Canadian- grown fruit;
2) an increase in the price of fruit;
3) scientific reports that confirm a reduction in water supply to the region.

Question

Quizplus · Accepted Answer

1) a decrease in demand for Canadian-grown fruit would lead to a decrease in demand for farmland in the fruit-growing region of southwestern Ontario, as there would be less demand for the fruit and therefore less need for land to grow it on. This would shift the demand curve for farmland to the left.
2) an increase in the price of fruit would increase the revenue potential for fruit growers, which would likely increase demand for farmland in the region. This would shift the demand curve for farmland to the right.
3) scientific reports confirming a reduction in water supply to the region would make it more difficult or costly for farmers to grow fruit on the land, lowering the productivity of the farmland and therefore lowering demand for it. This would shift the demand curve for farmland to the left.

Assume That the Market for Farmland in the Fruit- Growing