Answer each question with a complete sentence on a separate piece of paper. 8. Who serves as a great example of how the law of supply works? 9. If the price of tomatoes increases, what will the farmer decide to do? a. Why would the farmer do this? 10. What might the farmer do in order to be able to produce more tomatoes? 11. What would the farmer decide to do if the price of tomatoes drops? a. Why would the farmer do this? 12. What does the chart on this page show? Farmers serve as a great example of how the law of supply works. For instance, if a farmer is able to sell the tomatoes for $5 dollars a the farmer would be basket, willing to work the land to produce 100 baskets. However, if the price of tomatoes goes up to $10 a basket, the farmer now has an incentive to make more money (profit). Therefore, he will try and figure a way to produce even more tomatoes, more than the 100 baskets. To do this, the farmer may work harder, work more hours, use more land to grow more tomatoes, hire help, or even buy better equipment. But, what if the price for a basket of tomatoes falls to $3.00 a basket? The farmer will now decide to decrease the production of tomatoes because there is a lack of an incentive to grow so many. The farmer may even begin to grow another crop that is more profitable. If the price of a good Increases How the Law of Supply Works The producer (business) supplies goods. More Profit The business (producer) will increase supply. If the price of a good decreases Profit The producer decreases supply