Consider the Global Market for Barley,an Agricultural Commodity

question 101

Multiple Choice

Consider the global market for barley,an agricultural commodity.Suppose that in August,2014,the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes.In August,2015,the equilibrium price and quantity were P = $150 per tonne and Q = 410 million tonnes.Which of the following is the best possible explanation for this change in market equilibrium?

• A)There has been a decrease in supply of barley.
• B)There has been an increase in demand for barley.
• C)There has been a simultaneous increase in demand and increase in supply of barley.
• D)There has been a simultaneous increase in demand and decrease in supply of barley.
• E)There has been a decrease in demand for barley.

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Definitions:

Total Revenue

The overall amount of money generated by a business from its activities, such as sales of goods or services, before any expenses are subtracted.

Normal Profit

The minimum profit necessary for a company to remain competitive in the market, often considered the cost of doing business.

Marginal Cost

The cost increase associated with the production of an extra unit of a product or service.

Competitive Firms

Businesses that operate in a market environment where they vie with others to offer goods or services, focusing on price, quality, and innovation.