The SHORT-RUN market adjustment for a homogeneous product, like wheat, following a decrease in demand would most likely be:
A) an increase in production.
B) a decrease in price.
C) a decrease in production.
D) a decrease in demand for available substitutes.
E) an increase in price.

Question

Quizplus · Accepted Answer

With a decrease in demand for a homogeneous product like wheat, the market would have an excess supply of wheat, leading to a decrease in price to encourage demand to match supply. This means that farmers will be incentivized to cut down on production to maintain the market equilibrium.

The SHORT-RUN Market Adjustment for a Homogeneous Product, Like Wheat