Recall the Application About the Drought in Australia and Its

question 109

Multiple Choice

Recall the Application about the drought in Australia and its impact on the price of rice. In 2008, the
continuation of a 6-year drought in Australia reduced the amount of water available to irrigate Australia’s
rice crop. Farmers responded by reducing the amount of land devoted to rice. The drought was a major
factor in the change of rice prices.
-According to this Application, Australian rice farmers are experimenting with different rice varieties and growing techniques that require less water. If these techniques are successful and increase the size of the rice harvest, the equilibrium price of rice will _______ and the equilibrium quantity of rice will _______, ceteris paribus.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

New Technology

Refers to the latest advancements and innovations in various fields like information technology, biotechnology, and engineering.

Confederal

A form of government where various states or entities join together for common purposes but maintain substantial independence and sovereignty.

Federal

Pertaining to a system of government where power is divided between a central authority and constituent political units, such as states or provinces.

Unitary

A system of government where all the powers rest in a single, central authority.