Question

In the United States, what signal tells farmers and other producers what to produce? A. Supply B. Demand C. Price D. National policy

Answer 1

Option C Price is the signal which tells farmer and other producers what to produce. This is because as per economics theory when prices of commodities or crops increases the farmers or producers will be encouraged to produce more of the commodities to get more profit or higher producer surplus. They will keep on producing and supplying higher quantities till the prices move towards equilibrium prices. It encourages farmers to produce particular quantities of products which are at higher price.