Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They always lead to a surplus of goods.
B
They have no significant impact on market equilibrium.
C
They can cause shifts in supply or demand, altering equilibrium.
D
They exclusively affect consumer behavior without affecting supply.
Understanding the Answer
Let's break down why this is correct
Answer
Trade policies can greatly influence the price elasticity of demand in the agricultural sector, which in turn affects market equilibrium. Price elasticity of demand measures how much the quantity demanded of a product changes when its price changes. For instance, if a country imposes tariffs on imported agricultural goods, the price of these goods may rise, leading consumers to buy less of them if they are elastic. This change in demand can shift the market equilibrium, meaning the point where supply and demand meet will change, potentially leading to surpluses or shortages. Thus, trade policies not only affect prices directly but also shape how responsive consumers are to those price changes, ultimately impacting the overall market dynamics in agriculture.
Detailed Explanation
Trade policies can change how much people want to buy or how much farmers grow. Other options are incorrect because Some might think trade policies always create extra goods; It's a common belief that trade policies don't matter much.
Key Concepts
price elasticity
market equilibrium
trade policies
Topic
Market Dynamics in Agriculture
Difficulty
hard level question
Cognitive Level
understand
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