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the article states: “Production is also at a record high, with the USDA maintaining its forecast…...

the article states: “Production is also at a record high, with the USDA maintaining its forecast… at 15.99 billion bushels. That is up more than 2.3 billion bushels from last year’s total, the result of a record 97 million acres planted this year.” Why wouldn’t farmers jointly agree to reduce the number of acres they planted in order to increase the price of corn?

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Answer #1

The market for corn is (almost) perfectly competitive, with large number of sellers and buyers. Each buyer and seller is too small to influence market price, so the sellers are price takers, and accept the market-determined price as their relevant price.

As a result, the firm demand curve is horizontal, being perfectly elastic, at market price. If the farmers reduce output, they will experience only a decrease in revenue, since they do not face a downward-sloping demand curve. Therefore, they have no incentive to jointly agree to reduce output.

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