Other Things Being Equal, Suppose That the Demand for Wheat

question 312

Multiple Choice

Other things being equal, suppose that the demand for wheat in constant quality units increases. The increase in demand will cause

• A) a surplus of wheat.
• B) a higher equilibrium price and higher equilibrium quantity of wheat.
• C) fall in the market clearing price of corn, a substitute for wheat.
• D) a higher equilibrium quantity, but a lower equilibrium price of wheat.

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Definitions:

Labor Demand Curve

A graphical representation showing the relationship between the quantity of labor demanded by firms and the wage rate.

Purely Competitive Seller

A market participant that operates in a perfectly competitive market, where no single seller can influence prices or market conditions.

Diminishing Marginal Productivity

A principle in economics stating that as additional units of a variable input are added to a fixed input, the marginal product of the variable input eventually decreases.

MRP

Marginal revenue product, the additional revenue generated by employing one more unit of a resource.