If soybeans and chickpeas are substitutes in consumption explain, with the aid of a diagram (ceteris paribus), how an increase in the retail price of chickpeas might impact on the retail-farm price marketing margin for soybeans. Assume that the demand for soybeans is relatively price elastic and that the supply of soybeans is relatively price inelastic. Identify the incidence of this change on retail and farm prices. This conceptual analysis assumes that price adjustments occur instantly. What type of market structure does this imply? Discuss two reasons why lags in price changes may exist.

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An increase in the retail price of chickpeas would lead to an increas... View the full answer