-The above figure shows the supply and demand curves for rice in the U.S.and in Japan.Assume there is no trade between the two countries.If fertilizer price drop causes the supply curves in both countries to shift rightward by the same amount,then

Question

Quizplus · Accepted Answer

When the supply curve shifts rightward in both countries due to a drop in fertilizer prices, it means that the supply of rice increases in both countries. The extent of the increase in quantity demanded as a result of this shift depends on the slope of the demand curve. A steeper demand curve, as typically represented for Japan, indicates less sensitivity to price changes (inelastic demand), while a flatter demand curve, as typically represented for the U.S., indicates more sensitivity to price changes (elastic demand). Therefore, the quantity will increase more in the U.S. than in Japan because the U.S. demand curve is more responsive to changes in price.

-The Above Figure Shows the Supply and Demand Curves for Rice