According to the passage, a rise in the price of grain encourages
Economists often describe the price of a good as a signal. When a harvest fails, the price of grain rises, and that rise tells consumers to use less and encourages farmers elsewhere to plant more. Without any central planner issuing instructions, millions of separate decisions shift in the same direction. This is why some economists caution that price controls, though well meant, can silence the very signal that coordinates supply and demand.
Answer and explanation
Correct answer: D. farmers elsewhere to plant more
- Step 1: Locate the discussion on how grain price increases affect production incentives.
- Step 2: The text states that higher market prices provide a profit signal that encourages farmers elsewhere to plant more grain.
Answer
farmers elsewhere to plant more.
Why not the others: Higher prices discourage consumer purchasing and do not require central planning instructions.
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