Question

What would happen to a wheat farmer who tried to sell his wheat for $2.50 per bushel if the market price were$2.00 per bushel? Why?

Solution

Verified

A wheat farmer who tries to sell his wheat for $$2.50perbushelwhenthemarketpriceis2.50 per bushel when the market price is\

2.00perbushelwouldhardlyfindanycustomersaswheatisastandardizedproductwithalmostendlesssubstitutesaround.However,inrealityitcouldhappenthatnotallofthebuyershaveaninformationaboutwheatmarketprice,sohecouldprofitfromimperfectinformationandmakeasuccessinsellinghiswheatpricedovertheequilibriumprice.2.00 per bushel would hardly find any customers as wheat is a standardized product with almost endless substitutes around.\\ However, in reality it could happen that not all of the buyers have an information about wheat market price, so he could profit from imperfect information and make a success in selling his wheat priced over the equilibrium price.

Create an account to view solutions

By signing up, you accept Quizlet's Terms of Service and Privacy Policy
Continue with GoogleContinue with Facebook

Create an account to view solutions

By signing up, you accept Quizlet's Terms of Service and Privacy Policy
Continue with GoogleContinue with Facebook

Recommended textbook solutions

Principles of Macroeconomics 6th Edition by N. Gregory Mankiw

Principles of Macroeconomics

6th EditionN. Gregory Mankiw
436 solutions
Economics: Concepts and Choices 1st Edition by MCDOUGAL LITTEL

Economics: Concepts and Choices

1st EditionMCDOUGAL LITTEL
868 solutions
Principles of Economics 8th Edition by N. Gregory Mankiw

Principles of Economics

8th EditionN. Gregory Mankiw
1,335 solutions
Cambridge IGCSE Business Studies 4th Edition by Karen Borrington, Peter Stimpson

Cambridge IGCSE Business Studies

4th EditionKaren Borrington, Peter Stimpson
467 solutions

Related questions