📚 Learning Guide
Production Possibilities and Price Effects
medium

If the price of corn increases, it is true that farmers will always decrease their corn production to grow more soybeans, regardless of the market demand for soybeans.

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

The statement that farmers will always decrease corn production to grow more soybeans when corn prices increase is not necessarily true. Farmers make decisions based on several factors, including market demand and potential profits. If the price of corn rises, it might encourage farmers to grow more corn instead, especially if there is still strong demand for it. For example, if corn prices rise due to high demand for ethanol, farmers may choose to grow more corn rather than switch to soybeans, which might not be as profitable at that time. Therefore, while price changes can influence what farmers decide to grow, they do not always lead to a decrease in corn production.

Detailed Explanation

Farmers will not always switch to soybeans. Other options are incorrect because This answer suggests farmers only think about corn prices.

Key Concepts

Production Possibilities Curve
Substitutes in Production
Market Demand
Topic

Production Possibilities and Price Effects

Difficulty

medium level question

Cognitive Level

understand

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