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

Question

Quizplus · Accepted Answer

In the long run, markets tend to adjust to supply shocks like a drought. Farmers may plant more wheat the following year, or imports may increase, stabilizing prices and output. Thus, the effects are not permanent.

In the Long Run, a Year-Long Drought That Destroys Most