In One Year, the Price of Soybeans Was $3

question 13

Essay

In one year, the price of soybeans was $3.50 a bushel, and the Jones family farm planted 7,500 acres of them. In the following year, although the price of soybeans fell to $3.25 a bushel, the Jones family farm planted 8,200 acres of them. Use the concepts of a shift in the supply curve versus a movement along the supply curve to explain why this increase in soybean acreage does not represent a violation of the law of supply.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a business, including materials, labor, and manufacturing overhead.

Manufacturing Company

A business engaged in the production of goods using labor, machinery, and raw materials.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an essential component in its production.

Factory Overhead

All indirect costs associated with manufacturing, such as maintenance, utilities, and quality control, not directly tied to the production of specific goods.