A Farmer Produces the Same Output in 2020 as in 2019

question 14

Multiple Choice

A farmer produces the same output in 2020 as in 2019. His input prices increase by 3 percent and so does his product price. Which inflation rate makes the farmer as well off in 2020 as in 2019?

• A) 0 percent
• B) 1 percent
• C) 3 percent
• D) 6 percent

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price within a specific time period.

Equilibrium Prices

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, leading to a stable market condition where there is no tendency for change.

Seating Capacity

The number of people who can be accommodated in a space, such as a vehicle, room, or venue, based on the available seats.