Welcome back to our series on Price Theory problems with Professor Bryan Cutsinger. If you missed the previous problems and solutions, you can catch up here.
We’re kicking off 2025 with a brand new problem for you to tackle! Be sure to share your proposed solutions in the comments below. Professor Cutsinger will be monitoring the discussion for the next two weeks, and we’ll post his solution shortly after. Let the price theory games begin!
Question: Imagine that cotton and wool are considered substitutes. Furthermore, assume that the supply of cotton follows an upward sloping curve, while the supply of wool is perfectly elastic. How would a new production technique that boosts the supply of cotton impact the quantity of wool supplied? Would this change have any effect on the price of wool or the demand for cotton?
