Shortage of Cooking Oil Looms as Biofuels Gain Global Appeal

EconEye Admin

3 years ago

Governments are embracing energy made from plants like soybeans or canola creating a shortage of vegetable oils used in cooking. A severe drought has devastated Argentina’s soybean oil production. In Europe, restrictions on bee-toxic pesticides will curb planting of rapeseed, and Russia’s ongoing invasion of Ukraine will slash sunflower oil exports.—bloomberg.com

Answer the following questions to check your understanding of the story.

What is the relationship between biofuels and cooking oil?

Biofuels and cooking oil are ____________.

a) substitutes

b) complements

c) complements in production

d) substitutes in production

Wrong! - Which relationship best describes the relationship between biofuels and cooking oil—substitutes in production, complements in production, substitutes, and complements?

Correct! - Substitutes in production are goods that can be produced by using the same resources. Biofuels and cooking oil are produced from plants like soybeans, canola, sunflowers, and rapeseed.

Why is a shortage arising in the market for vegetable oil?

a) The supply of cooking oil is decreasing and the demand for cooking oil is increasing.

b) The supply of cooking oil is decreasing with no change in the demand for cooking oil.

c) The demand for cooking oil is increasing with no change in the supply of cooking oil.

d) The demand for cooking oil is decreasing less than the supply of cooking oil is decreasing.

Wrong! - How does the increase in the production of biofuels influence the market for cooking oil? Is the demand for cooking oil changing?

Well Done! - The supply of cooking oil is decreasing. Some factors of production are being transferred into the production of biofuels. And growing conditions in Argentina, regulations in Europe, and Russia’s invasion of Ukraine are also decreasing the factors of production available to produce cooking oil. The demand for cooking oil has not changed.

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