The answer to this depends on how picky and precise you believe that your instructor is. This is because the supply of wheat will go up in this case, but only one of the two factors you mention actually causes it to go up. In other words, if the price of pesticides drops, the supply of wheat will rise, but an increase in the demand for wheat does not cause supply to rise.
One of the main determinants of supply is the cost of inputs, which are the things that are needed to create a product. In most cases, farmers need pesticides in order to produce good crops of wheat. Therefore, pesticide is an input of wheat. When the price of an input drops, a producer gets more profit for selling their product at any given price. This means that they will want to sell more of that product at that price. When you want to sell more of a product at a given price than you did before, that is an increase in supply. Thus, a decrease in the price of pesticides causes an increase in the supply of wheat.
Demand is not a determinant of supply. If demand rises, it has no effect on how much of a product the producer wants to sell at a given price. Instead, when demand rises, the price of the product rises. Producers want to sell more than they previously did, but it is at a different price, so it is not a change in supply. When demand goes up, we see a change in quantity supplied, not a change in supply.
So, a drop in the price of pesticides will cause the supply of wheat to rise, but an increase in demand for wheat has no impact on the supply of wheat. In your view, does that make the whole statement true or false? What do you think your instructor will say? (If I put a question like this on homework for my students, I would expect them to say it is false because I would be testing to see if they know the difference between a change in supply and a change in quantity supplied, but I do not know what your instructor is trying to achieve with this question so I do not know what answer you should give.)
No comments:
Post a Comment