If Wheat Prices Fell by 2 Percent When Producers Thought

question 84

Multiple Choice

If wheat prices fell by 2 percent when producers thought other prices were falling by 5 percent,what would be the effect on wheat output?

• A)We could not predict the likely change in wheat output that would result.
• B)It would tend to rise as a result.
• C)It would tend to remain unchanged as a result.
• D)It would tend to fall as a result.

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Definitions:

Long-run Economic Profits

Profits that occur when a firm's total revenue exceeds its total costs, including both explicit and implicit costs, over the long term.

Threat Of New Entrants

The potential challenge posed by a new competitor entering an industry or market.

Contestable

Pertaining to a market situation where costs of entry and exit are low, allowing for potential competition to exist even if the market is held by a few companies.

Competitive Level

indicates the intensity of competition within a market, influencing firms' strategies and market outcomes.