Other things constant, if wheat production is a price-taker industry, a decrease in the price of fertilizer used to grow wheat will
A) increase the supply of wheat.
B) increase the demand for wheat.
C) decrease the supply of wheat.
D) do both a and b.

Question

Quizplus · Accepted Answer

A decrease in the price of fertilizer will lower the cost of production for wheat farmers, which will make it profitable for them to produce more wheat at any given market price. Therefore, the supply of wheat will increase. As a result, the price of wheat could potentially decrease due to the increase in supply.

Other Things Constant, If Wheat Production Is a Price-Taker Industry