What happens in the rice market if climate change leads farmers to switch from corn to rice production?

When farmers shift production from corn to rice due to climate change, we can analyze the effects on the rice market through the lens of supply and demand.

Initially, the supply of rice will increase as more farmers allocate their resources to its production instead of corn. This increase in supply typically leads to a reduction in rice prices, ceteris paribus (assuming all other factors remain constant). However, since more suppliers are entering the market, the total quantity of rice available also increases, which satisfies part of the market demand.

As the quantity increases and prices drop, consumer demand may respond positively, leading to an increase in the quantity demanded for rice. This interaction creates a situation where both price and the quantity sold in the market may increase substantially. While the initial effect of increased supply tends to lower prices, the response from consumers may further stimulate quantity demand, creating an overall increase in both price and quantity depending on how strong these effects are.

In this specific case, the correct choice recognizes that the increase in production due to the switch from corn to rice leads to an increase in the overall market supply of rice, which ultimately supports an increase in both price and quantity in the market as consumers respond favorably to the availability of this crop.