Production Trade-offs and Supply Shifts

Steps:

• Recognize fixed land creates opportunity cost: more wheat means less oats.
• Increasing wheat supply requires a factor that lowers wheat's relative production costs or boosts its profitability.
• Assess each option's effect on incentives to allocate land toward wheat.
• Select the option that shifts resources specifically to wheat.

Why D is correct:

• Improved efficiency lowers marginal costs for wheat (law of supply), enabling more output with same resources and shifting supply curve rightward.

Why the others are wrong:

• A: Oats subsidy raises oats profitability, diverting land from wheat.
• B: Wheat tax increases its production costs, reducing wheat supply.
• C: Wage increase raises costs equally for both crops, leaving relative allocation unchanged.

Final answer: D