Suppose that corn and soybeans are substitutes in production. An increase in the price of corn will:
Understand the Problem
The question is asking what effect an increase in the price of corn will have on the supply of soybeans, considering that corn and soybeans are substitutes in production.
Answer
Decrease the supply of soybeans.
The supply of soybeans will decrease.
Answer for screen readers
The supply of soybeans will decrease.
More Information
When the price of corn increases, producers are likely to allocate more resources to growing corn, reducing resources available for soybeans.
Tips
A common mistake is confusing supply with demand, as both terms are related but distinct in their economic implications.
Sources
- Homework explanation on corn and soybean production - homework.study.com
- Farmers can plant either corn or soybeans - homework.study.com
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