Suppose farmers get together and decide to be less productive.They want to do this so that they can shift the supply curve of farm products leftward and raise the price.What are the thoughts of a profit-maximizing farmer most likely to be once this agreement has been made?
A)If I break the agreement while everyone else holds to it,I can make myself better off.
B)I am happy that we decided to be unproductive;I can't be unproductive by myself.
C)I will definitely hold to the agreement.
D)Everyone will break the agreement but me.

Question

Quizplus · Accepted Answer

A profit-maximizing farmer would want to maximize their profits by producing as much as possible and selling at the highest price they can get. If other farmers agree to be less productive, this creates an opportunity for the profit-maximizing farmer to break the agreement and increase their own production, selling at a higher price due to the overall decrease in supply. Therefore, the rational choice for the profit-maximizing farmer is to consider breaking the agreement to increase their own profits, even if it goes against the collective interest of the group.

Suppose Farmers Get Together and Decide to Be Less Productive