Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, the

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3 years ago

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Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, the

n we would expect: the supply to increase as farmers plant more corn. The supply of ethanol, a corn-based product, to increase. Consumer demand for wheat to fall. The supply to fall as farmers plant more of other crops.

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1 answer:

solmaris [256] · Answer 1 · 2022-02-23T17:11:07+03:00

Answer: the supply to increase as farmers plant more corn.

Explanation:

According to the law of supply, quantity supply of a good is positively related to its price. When price of the good rises, producers will take advantage of the higher price by increasing supply. While, when price of the good falls, producers will supply less to the market.

Thus, when corn prices rise significantly and farmers expect the price of corn to continue rising relative to other crops, then we would expect the supply to increase as farmers plant more corn.