Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?
The farmer prefers a market in which conditions are unfavorable because a smaller supply will result in a higher market price. Because demand is inelastic, a higher price leads to higher revenue.
You might also like to view...
The aggregate supply curve slopes ________ because a ________ in the price level brings a ________ in the real wage rate
A) upward; rise; rise B) downward; fall; rise C) upward; rise; fall D) upward; fall; fall E) downward; rise; rise
Why does perfect competition guarantee a Pareto optimal distribution of goods between two people? Under perfect competition,
A) everyone has the same preferences. B) everyone faces the same prices. C) everyone consumes the same quantity of both goods. D) goods are homogeneous.
Less than 50% of two-parent poor families have income from earnings
Indicate whether the statement is true or false
Consider a society facing the production possibilities curves in the figure shown. What is the most likely cause of a society moving from PPF3 to PPF1?
A. A tornado B. A desire to read less books C. Better sewing technology D. More workers