In the long run, a drought that destroys most of a summer's wheat crops would cause permanently:
A) higher prices.
B) lower output.
C) lower prices.
D) None of these are true.

Question

Quizplus · Accepted Answer

In the long run, markets tend to adjust to temporary shocks like a drought. Farmers may adapt by changing their planting strategies, technology may improve, and trade can adjust to mitigate the long-term impact on prices and output. Therefore, none of the options of permanently higher prices, lower output, or lower prices are necessarily true as a direct consequence of a single summer's drought.

In the Long Run, a Drought That Destroys Most of a Summer's