What happens in the market for corn if producers expect a future price increase, and begin to put production into storage?

• A. Demand shifts to the lef
• B. Demand shifts to the right
• C. Supply shifts to the left
• D. Supply shifts to the right

Answer: (C)

Verified step by step guidance

1. Begin by understanding the concept of supply and demand in a market. Supply refers to the quantity of a good that producers are willing and able to sell at different prices, while demand refers to the quantity that consumers are willing and able to purchase.
2. Consider the scenario where producers expect a future price increase for corn. This expectation influences their current production decisions, as they anticipate higher profits in the future.
3. When producers expect higher future prices, they may choose to store some of their current production rather than sell it immediately. This action effectively reduces the current supply of corn available in the market.
4. A reduction in current supply, with demand remaining constant, leads to a leftward shift in the supply curve. This is because at each price level, the quantity of corn available for sale is now less than before.
5. Conclude that the correct market response to producers storing corn in anticipation of future price increases is a leftward shift in the supply curve, indicating a decrease in current supply.