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Between 1997 and 2014, the source reports that North Dakota corn acreage more than doubled while wheat acreage did not. What reason does it give for farmers switching from wheat to corn?
AWheat and corn prices had been steadily converging
BCorn became fully immune to any bad weather
CThe government banned wheat farming in North Dakota
DWheat stopped growing in the region entirely
Answer & Solution
Correct answer: A. Wheat and corn prices had been steadily converging
1. Wheat historically priced higher than corn, which offset corn's advantage of higher yield per acre.
2. As , wheat and corn prices converged in recent years, narrowing to just 71 cents per bushel by April 2013.
3. With the price gap narrowed, switching to higher-yielding corn made better business sense for farmers.
4. Because farmers can easily switch which crop they plant, this is exactly the kind of entry and exit response perfect competition predicts, not a government ban or a change in what can physically grow there.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.1 | Perfect Competition and Why It Matters_
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