Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause farmers to:
A) substitute wheat for the production of corn.
B) substitute corn for the production of wheat.
C) lower the production of corn and wheat.
D) raise the production of wheat and corn.

Question

Quizplus · Accepted Answer

The law of supply states that producers are willing to supply more of a good at a higher price. Therefore, if the price of wheat increases, farmers will allocate more land to grow wheat instead of corn to maximize their profits.

Suppose Farmers Can Use Their Land to Grow Either Wheat