Multiple Choice
A worldwide hops (a flower used in brewing) shortage made stouts, ales and other specialty microbrews more pricy in 2008. Gayle Goshie, a hops farmer, blames overproduction for hops' previously cheap place on the agricultural market. The glut pushed many hops farmers out business, which gradually helped hops prices recover. Suppose farming hops is a perfectly competitive market. How did farmers going out of business help hops prices recover?
A) Fewer farmers cause the market supply curve to shift leftward, causing price to rise.
B) Fewer farmers cause an increase in market demand, causing price to rise.
C) Fewer farmers cause an increase in the surviving firms' costs, causing higher prices.
D) Fewer farmers cause the individual firms' supply curves to decrease, causing higher prices.
Correct Answer:
Verified
Correct Answer:
Verified
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