Tom Gomez 

 October 6, 1986 

 Page -6- 



Development of Redwln Winter Wheat : Redwin wheat is a geographical- 

 specific technological advancement only affecting Montana and bordering 

 regions. I will assume that the effect of Redwin on the price of wheat 

 is negligible (i.e., zero). The following figure illustrates the adjust- 

 ment for Montana. 



FIGURE 4 



Montana 



Price 



Supply 1 /Supply 2 



Quantity/Time 



The area of producer surplus has been enlarged and so Montana producers 

 benefit with only negligible affect on the entire market. If Montana 

 and bordering areas produced a significant portion of the market (so 

 that the market price was affected) , then it is possible that Montana 

 and bordering producers could benefit and other producers suffer. 



Parasite Control and Low Quality Forage Utilization in Range 

 Livestock ; This is an area-specific technological advancement that will 

 shift the supply curve for a significant share of the market (at least 

 all of the southeast) . The increase in technology will only have minor 

 (for our purposes, zero) affect on the supply generated by Montana. As 

 a result, aggregate supply will pivot out as in Figure 5. 



Supply 1 



Supply 2 



Ql Q2 



Quantity /Time 



