Land Used to Grow Corn Could Also Be Used to Grow

question 160

Multiple Choice

Land used to grow corn could also be used to grow soybeans. Which of the following is true when the farmer plants soybeans and the market price of corn rises?

• A) The opportunity cost of producing soybeans decreases.
• B) The opportunity cost of producing soybeans increases.
• C) There will be no change in the opportunity cost of producing soybeans.
• D) The opportunity cost of producing corn increases.

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Definitions:

AASB 141

An accounting standard regarding agriculture under the Australian Accounting Standards Board that guides the accounting for agricultural activity.

AASB 141

Refers to the Australian Accounting Standard on Agriculture, guiding on the accounting for agricultural activity including the recognition and measuring of biological assets.

Biological Assets

Living plants or animals that are used in agricultural activities from which agricultural produce is harvested, accounted for under specific accounting standards.

Fair Value

An estimate of the price at which an asset or liability could be exchanged in a current transaction between willing parties.