If Farmers Operating in the Competitive Wheat Industry Are Incurring

question 68

Multiple Choice

If farmers operating in the competitive wheat industry are incurring losses,and are not kept in business with government subsidies,which of the following will result?

• A)Price and quantity produced will both increase in the long run.
• B)Resources will be reallocated out of the wheat industry into more productive uses.
• C)Farmers will run economic losses indefinitely, if they are rational.
• D)The supply of wheat will fall to near zero and the U.S. will become dependent on foreign suppliers of food.

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Definitions:

High Freight Rates

The increased costs associated with transporting goods, often due to factors like fuel prices, demand, regulatory fees, and infrastructure issues, impacting economies and consumers.

Excessive Interest Rates

Interest rates that are significantly higher than what would be considered reasonable or fair, often associated with predatory lending practices.

Low Tariffs

Refers to relatively minimal taxes or duties placed on the import or export of goods which can encourage free trade and lower the cost of imported goods.