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Chapter 1: Q.2 - For Critical Thinking (page 1)

How will the long-run adjustment of Egyptian cotton supply from the elimination of the subsidy likely affect the number of suppliers - that is, Egyptian cotton farmers? Explain.

Short Answer

Expert verified

In the long-run adjustment of Egyptian cotton supply from the elimination of the subsidy likely affect the number of suppliers, and providers will be scarce.

Step by step solution

01

Given Information

This is on the grounds that endowment incites providers to deliver merchandise and it would urge providers to supply as their expense of creation will be viewed as less after consideration of sponsorship.

02

Explanation

Notwithstanding, with the disposal of Subsidies, providers will be more scarce. This is on the grounds that, the expense of natural substances to create cotton will increment, accordingly, diminishing the pace of benefit. In the short run, their inventory will be moderately inelastic. Be that as it may, in the lengthy run, Egyptian cotton ranchers will attempt to track down one more other option or utilize some other strategy to lessen the expense of creation.

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