Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Consumers in country A have a higher income, allowing them to buy more corn.
B
Consumers in country A prefer corn over wheat, leading to a shift in demand.
C
The decrease in corn price makes it a more attractive option compared to other goods.
D
The government of country A has imposed a tax on wheat, making it less affordable.
Understanding the Answer
Let's break down why this is correct
Answer
When the price of corn decreases significantly, it usually means that corn has become cheaper for consumers. If country B specializes in corn production, it can produce corn more efficiently, leading to a surplus that lowers prices. This lower price can attract buyers from other countries, like country A, who may find corn more affordable now. As a result, the demand for corn in country A likely increases because people there can buy more corn without spending much money. For example, if a family in country A used to buy one bag of corn for $10, but now it costs only $5, they might decide to buy two bags instead, increasing the overall demand.
Detailed Explanation
When corn prices drop, it becomes cheaper for people to buy. Other options are incorrect because This option suggests that higher income leads to more corn purchases; This answer implies that a preference for corn alone drives demand.
Key Concepts
Elasticity of demand
Price changes
Consumer behavior
Topic
Elasticity in Market Dynamics
Difficulty
medium level question
Cognitive Level
understand
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