From a standpoint of resource allocation, a surplus of corn implies
A) Consumers would prefer some of the resources used to produce corn be used to produce something else
B) The market for agricultural products is failing
C) Government should purchase the surplus to protect the farmers
D) The price of corn is too low and should be increased
E) The quantity demanded of corn exceeds the quantity supplied

Question

From a standpoint of resource allocation, a surplus of corn implies 
A) Consumers would prefer some of the resources used to produce corn be used to produce something else
B) The market for agricultural products is failing
C) Government should purchase the surplus to protect the farmers
D) The price of corn is too low and should be increased
E) The quantity demanded of corn exceeds the quantity supplied

Quizplus · Accepted Answer

A surplus of corn means that there is more corn being produced than is being demanded by consumers. This suggests that resources (land, labor, capital) being used to produce corn could be better used elsewhere to produce goods that are in higher demand and generate more value for consumers. Therefore, a surplus of corn implies that resources are being inefficiently allocated, and their reallocation could result in a better allocation of resources.

From a Standpoint of Resource Allocation, a Surplus of Corn