Think about the demand for wheat bread.

a. What is a substitute good for wheat bread? How does an increase in the price of wheat bread impact the market for your chosen substitute good?

b. What is a complementary good for wheat bread? How does a decrease in the price of wheat bread impact the market for your chosen complementary good?

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Beverley SmithLv2

24 Feb 2019

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Ossuary produces whole wheat bread which sells for $3 a loaf. In order to produce an additional loaf of bread, it would cost Ossuary $3, but the average loaf only costs them $2.50. Assuming that the market for bread is competitive, is Ossuary in short run equilibrium? Why or why not? Is Ossuary in long run equilibrium? If so, explain why. If not, explain what would happen in the market to bring it to equilibrium.

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