Discussion
The price of an agricultural input is mainly determined by
Answer: B
The price of an agricultural input is mainly determined by demand and supply in the market.
In a market economy the price of inputs such as seed, labour, machinery and most fertilisers settles where the quantity demanded by farmers matches the quantity supplied by producers and traders. A rise in demand at sowing time, or a fall in supply, pushes the price up.
Government intervention, such as fertiliser subsidies, and international trade policies can shift prices, but they act through supply and demand rather than replacing it, so 'only' makes the first option wrong. Farm size affects how much a farmer buys, not the market price of the input.
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