Factors Affecting Supply
As an economist at the USDA you observe there has been a change in the market for processed corn this past year (displayed below). Which option below can best explain this recent market shift?
- The cost of farm labor has decreased.
- There has been an exceptionally short growing season this past year.
- The price of wheat, a substitute, has increased.
Several unfavorable changes have occurred this past year for almond suppliers in California. A drought continues to ravage crops, and a recent strike by migrant farm laborers has sent production costs soaring. In response to these recent events the almond growers lobby has successfully petitioned the California state legislator for a significant subsidy to almond farmers.
Given these events, how would we expect the supply curve for almonds to react?
- The supply curve would shift inwards.
- It is impossible to tell with the given information.
- The supply curve would shift outwards.
List and explain three out of the four factors responsible for shifts in the supply curve.