what is the shift in the demand or supply curve for:
The development of the sugar beet as a major source of sugar has lowered land rents on islands producing sugar cane
To determine the shift in the demand or supply curve, we need to understand whether this development affects the demand or supply of sugar or land rents.
In this scenario, the development of the sugar beet as a major source of sugar has lowered land rents on islands producing sugar cane. This means that the cost of producing sugar cane has decreased, resulting in lower land rents for cultivating sugar cane.
Since the development of sugar beet affects the cost of producing sugar cane (supply side), the shift will occur in the supply curve. Specifically, it will cause a rightward shift in the supply curve for sugar cane on these islands.
Now, let's break down how this shift occurs:
1. Decreased production costs: As the sugar beet becomes a major source of sugar, it introduces competition for traditional sugar cane producers. This leads to advancements in technology and farming practices, resulting in increased efficiency and reduced costs for producing sugar cane. Lower production costs make it more affordable for producers to rent land on these islands and cultivate sugar cane.
2. Lower land rents: With decreased production costs, sugar cane producers can offer lower rents to landowners on the islands. This occurs because the lowered cost of production allows producers to maintain profitability even while paying lower land rents. Landowners, in turn, accept lower rents to maintain their income.
As a result, the supply curve for sugar cane on the islands producing sugar cane will shift to the right. This means that at each price level, the quantity supplied of sugar cane will increase compared to the previous equilibrium.