Sia
Question
Macroeconomics
Posted 8 months ago
Land in the United States can be used to produce either soybeans or corn. The price of soybean fertilizer has fallen due to cheaper imports from China.
What will change for soybeans and corn?
Choose 1 answer:
(A) Supply of both corn and soybeans will increase
(B) Supply of soybeans will decrease and supply of corn will increase
(c) Supply of soybeans will increase and the supply of corn will decrease
(D) Quantity supplied of corn and quantity supplied of soybeans will both increase
(E) Quantity supplied of corn and quantity supplied of soybeans will both decrease
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Answer from Sia
Posted 8 months ago
Sure, let's analyze the given question from a macroeconomic perspective.
Question:
Land in the United States can be used to produce either soybeans or corn. The price of soybean fertilizer has fallen due to cheaper imports from China.
What will change for soybeans and corn?
Choose 1 answer:
(A) Supply of both corn and soybeans will increase
(B) Supply of soybeans will decrease and supply of corn will increase
(C) Supply of soybeans will increase and the supply of corn will decrease
(D) Quantity supplied of corn and quantity supplied of soybeans will both increase
(E) Quantity supplied of corn and quantity supplied of soybeans will both decrease
Solution
a
Definition of Supply: Supply refers to the total amount of a specific good or service that is available to consumers
b
Impact of Fertilizer Price: A decrease in the price of soybean fertilizer reduces the cost of production for soybeans
c
Supply Curve Shift: Lower production costs for soybeans will shift the supply curve for soybeans to the right, indicating an increase in supply
d
Resource Allocation: Since land can be used to produce either soybeans or corn, more land will likely be allocated to soybean production due to the lower cost, reducing the land available for corn production
e
Conclusion: Therefore, the supply of soybeans will increase, and the supply of corn will decrease
Answer
(C) Supply of soybeans will increase and the supply of corn will decrease
Key Concept
Supply and Resource Allocation
Explanation
A decrease in the price of soybean fertilizer reduces production costs, increasing the supply of soybeans. As land is reallocated to soybean production, the supply of corn decreases.
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