Question

Assuming that a farmer can produce some combination of corn and soybeans and that the expected price of soybeans increases, the farmer will increase his production of corn.

a. True
b. False

Answer 1

The statement that an increase in the expected price of soybeans will lead a farmer to increase their production of corn is false.

Step-by-step explanation:

The statement that an increase in the expected price of soybeans will lead a farmer to increase their production of corn is false. When the expected price of soybeans increases, farmers are more likely to shift their production towards soybeans instead of corn. This is because farmers want to maximize their profits by producing more of the crop that has a higher price. Therefore, an increase in the expected price of soybeans would result in a decrease in the production of corn, not an increase.