How are the following events likely to affect the market supply of rice in an economy?

a) A fall in the wage rate of farm labor
b) An increase in the productivity of farm capital due to better technology
c) An increase in the use of agricultural

land for non-agricultural purposes


a) A fall in the wage rate of farm labor will lower the cost of producing rice, allowing farmers to supply more at the same market price. As such there will be an increase in the supply of rice, and this will be represented by a right shift in the market supply curve.
b) An increase in the productivity of farm capital implies a fall in the cost of production. This will allow farmers to supply more at a given price. This will be represented by a right shift in the market supply curve for rice.
c) An increase in the use of agricultural land for non-agricultural purposes will imply a fall in the scale and size of producers. As such there will be a decrease in the supply of rice, and this will be represented by a left shift in the market supply curve of rice.

Economics

You might also like to view...

What will be the principal and most immediate effect on the supply or demand of raw cotton grown in the United States if a low-cost process for making cotton cloth wrinkle-free is developed?

A) Decrease in demand B) Decrease in supply C) Increase in demand D) Increase in supply

Economics

If the required reserve ratio is one-third, currency in circulation is $300 billion, and checkable deposits are $900 billion, then the currency-deposit ratio is

A) 0.25. B) 0.33. C) 0.67. D) 0.375.

Economics

An exterior painting company is contemplating buying a bigger truck and ladder. This is a

a. bad decision because average costs will be higher b. good decision because average costs will be lower c. long-run decision d. short-run decision e. bad decision because more fuel will be needed

Economics

In conducting their research, economists often substitute historical events and historical episodes for

a. theories and observations. b. laboratory experiments. c. models. d. assumptions.

Economics