Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

Question

BlackTom AI · Accepted Answer

The question presents a statement and asks us to interpret it within the context of supply in microeconomics. 
First, consider the core idea: the law of supply states that, ceteris paribus (all else equal), an increase in the price of a good leads producers to increase the quantity supplied of that good. In this case, if the price of wheat rises, farmers have greater incentive to produce and sell more wheat, assuming costs and technology remain unchanged. 
Next, evaluate the implication of the statement: 'An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market.' This aligns directly with the basic supply curve behavior—higher price makes production more profitable, prompting an upward movement along the supply curve (or a shift if costs change, but under the standard interpretation we focus on the movement along the curve). 
Then consider potential trick interpretations: If one wanted to argue that higher prices reduce supply, they would be applying a supply-shift in the opposite direction or invoking non-price factors like supply shocks, tax changes, or expectations, which are not specified here. The plain reading of the statement is about the price-quantity supplied relationship, not about other determinants. 
Since the provided answer is 'The statement is correct.', the reasoning supports this as a true description of the law of supply: price increases tend to increase quantity supplied, ceteris paribus. 
Note: the prompt doesn’t present alternative answer choices to compare against, so there is no further option-by-option analysis to perform beyond confirming the alignment of the statement with the standard theory of supply.

经济&202 33295 第三章测验

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

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