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)a change in consumer preferences toward eating more fruit;
3)scientific reports that confirm a reduction in water supply to the region.
A)1 and 2
B)2 and 3
C)1 and 3
D)1 only
E)3 only

Question

Quizplus · Accepted Answer

1) a decrease in demand for Canadian-grown fruit will decrease the demand for farmland in the fruit-growing region of southwestern Ontario, causing the demand curve to shift to the left.
3) scientific reports that confirm a reduction in water supply to the region will decrease the productivity of the farmland, which will reduce the demand for the land, causing the demand curve to shift to the left. The decrease in productivity due to the water shortage could lead to lower yields, and therefore lower profits for fruit growers, which would lead to a lower willingness to pay for farmland.

2) a change in consumer preferences toward eating more fruit will increase the demand for Canadian-grown fruit, which in turn will increase the demand for farmland in the fruit-growing region. Therefore, it will not shift the demand curve to the left.

Assume That the Market for Farmland in the Fruit-Growing Region