If wheat prices rose by 12 percent when producers thought other prices were rising by 15 percent,
A)wheat output would tend to rise as a result.
B)wheat output would tend to fall as a result.
C)wheat output would tend to remain unchanged as a result.
D)we could not predict the likely change in wheat output that would result.

Question

Quizplus · Accepted Answer

If producers believe that other prices are rising more than the price of wheat, they may choose to shift their resources to produce those goods instead. This would lead to a decrease in wheat output, causing wheat prices to rise.

If Wheat Prices Rose by 12 Percent When Producers Thought