More farmers have recently entered the corn industry. In addition there has been a technological advancement in the fertilizer industry providing corn farmers with a cheaper and a more effective fertilizer. In the market for corn, the effects these changes will have on the equilibrium price and quantity are
A) price will increase, and quantity will decrease.
B) price will increase, and the effect on quantity is indeterminate.
C) price will decrease, and quantity will increase.
D) price will decrease, and the effect on quantity is indeterminate.

Question

Quizplus · Accepted Answer

The entry of more farmers into the corn industry increases the supply of corn, and the technological advancement in the fertilizer industry reduces the cost of production, further increasing the supply. Both factors lead to a decrease in the price of corn and an increase in the quantity sold, as more supply lowers prices and makes more quantity available at lower prices.

More Farmers Have Recently Entered the Corn Industry