Recall the Application about the drought in Australia and its impact on the price of rice. In 2008, the
continuation of a 6-year drought in Australia reduced the amount of water available to irrigate Australia’s
rice crop. Farmers responded by reducing the amount of land devoted to rice. The drought was a major
factor in the change of rice prices.
-According to this Application, Australian rice farmers are experimenting with different rice varieties and growing techniques that require less water. If these techniques are successful and increase the size of the rice harvest, the equilibrium price of rice will _______ and the equilibrium quantity of rice will _______, ceteris paribus.

Question

Quizplus · Accepted Answer

If the new techniques are successful and increase the size of the rice harvest, the supply of rice will increase. This increase in supply will lead to a decrease in the equilibrium price and an increase in the equilibrium quantity of rice, assuming all other factors remain constant (ceteris paribus).

Recall the Application About the Drought in Australia and Its