Question

In: Economics

1. What does it mean when a firm "goes local?" a. Draw two sets of supply...

1. What does it mean when a firm "goes local?"

a. Draw two sets of supply and demand graphs for a grocery store. Label the first one "standard" and label the second one "local." Illustrate how "going local" shifts supply, demand, or both curves.

b. Explain why you drew your graphs the way you did.

Note: Oliver's grocery store is just a case study of a grocery store that "goes local" by buying local products to inflate local economy

Solutions

Expert Solution

Localization will lead to multiple effects that will shift both the demand and supply curves. This will lead to the settlement of a new equilibrium in the market. In the new equilibrium, the price of goods would be higher. The detailed workings are shown below:

Rahul Sunny answered 1 year ago
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