Question

Recent medical research revealed that the presence of gluten in oats can cause celiac disease in the elderly. Since the elderly are an important consumer segment in this market, industry experts predicted a fall in the price of commercially-available oats. However, after the publication of the research, the price of oats actually increased. Which of the following, if true, would explain this outcome? Suppliers of oats did not react to the news because they believed any change in demand would be temporary. Another research study noted that the gluten-content in oats, also used as livestock feed, does not affect the animals. All consumers of oats, including the elderly, drastically reduced their consumption. The availability of substitutes, such as wheat and barley, increased in the market. The supply of oats came down drastically, with some major participants exiting the market.

Answer 1

The supply of oats came down drastically, with some major participants exiting the market.

Step-by-step explanation:

The price of oats actually increased because, due to the research that says oats contain gluten that can cause a disease in the elderly and therefore not good for consumption, the supply of oats decreased thereby resulting to the scarcity of oats in the market.

When supply decreases, price increases.