If wheat prices fell by 2 percent when producers thought other prices were falling by 5 percent,what would be the effect on wheat output?
A)We could not predict the likely change in wheat output that would result.
B)It would tend to rise as a result.
C)It would tend to remain unchanged as a result.
D)It would tend to fall as a result.

Question

Quizplus · Accepted Answer

If wheat prices fell by 2 percent while producers expected a 5 percent fall in other prices, wheat becomes relatively more profitable compared to other goods. This could incentivize producers to increase wheat output.

If Wheat Prices Fell by 2 Percent When Producers Thought