Question

Assume the domestic price of corn is $1.00 and the quantity of corn produced is 100 tons. If the world price of corn exceeds $1.00, then U.S. producers will produce ______ than 100 tons of corn, creating a ______ that will be ______.

A. more; surplus; exported
B. less; shortage; exported
C. more; surplus; imported
D. less; shortage; imported

Answer 1

The correct answer is option A. more; surplus; exported.

Step-by-step explanation:

When the world price of an agricultural product like corn is higher than the domestic price, domestic producers will increase production to take advantage of the higher prices on the international market.

Assuming that the domestic price of corn is $1.00 and the quantity of corn produced is 100 tons, if the world price exceeds $1.00, U.S. producers will produce more than 100 tons of corn. This increase in production creates a surplus of corn, which will be exported to countries where the price of corn is higher.