Market for butter Market for margarine

x s xms
b

0 xms after technology

p
b
A A

'
p B pm0 change
b B
* '
p
b C pm
*
pm C

xbd ( pm0 ) xmd ( pb0 )

xbd ( pm' )
xmd ( pb* )
xbd ( pm* )
xb* xb0 0
xm *
xm
Conclusion: As a result of the improvment in technology in the production of margarine, both the price and quantity of
butter will go down ( pb , xb ) , the price of margarine will go down ( pm ) and the quantity of margarine will go up
( x ) .
m
Repeat the problem at home but supposing that the initial movement that originates the
change is the entry of a group of vegeterians that increases the demand for margarine.