Suppose the Development of New Drought-Resistant Hybrid Seed Corn Leads

question 121

Multiple Choice

Suppose the development of new drought-resistant hybrid seed corn leads to a 50-percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology. If the conditions in the corn production industry are approximated by the price-taker model, which of the following is most likely to occur?

• A) The price of corn will increase.
• B) The price of soybeans (a substitute for corn) will increase.
• C) The profits of corn farmers who quickly adopt the new technology will increase.
• D) The profits of corn farmers who do not adopt the new technology will increase.

---

Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as raw materials and labor costs.

Outside Provider

An external entity or organization that supplies goods or services to another business or individual.

Special Order

A one-time or unique purchase order for goods or services, often tailored to specific requirements outside of regular offerings.

Broker Commission

A fee paid to a broker for executing a transaction. It is typically calculated as a percentage of the transaction value.