A key ingredient of hazelnut butter (one brand that makes this is Nutella) is hazelnuts which are grown in many regions around the world. Hazelnut butter production uses about a quarter of the world crop. Two things have occurred recently, a trade policy banned the importation of most hazelnut crop into the US where most of the processing is done. At the same time, taste for hazelnuts is down due to perceived health hazard from consuming hazelnut butter during this period.
Required:
How do these occurrences affect the equilibrium price and quantity of hazelnut butter?
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A key ingredient of hazelnut butter (one brand that makes this is Nutella) is hazelnuts which are gr...
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