Agriculture and the elasticty of demand
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The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience,
a. lower price, greater quantities sold, and lower incomes
b. higher prices, greater quantities sold, and higher incomes
c. Lower prices, lower quantities sold, and lower incomes
d. Higher prices, higher quantities sold, and higher incomes.
My answer is B
Along the upper end of a linear demand curve, the price elasticity of demand will be
a. price inelastic
b. price elastic
c. unit-price elastic
d. positive
Answer is B
Which of the following is not a factor in determining the price elasticity of demand?
a. the number of available substitutes
b. the tie period involved
c. the proportion of the budget spent on the item
d. the slope of the supply curve.
I will have to say it is A
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Solution Summary
How the inelastic demand for agricultural products affects farmers when there is a bumper crop
Solution Preview
When demand is inelastic, we can expect changes in price to cause only modest changes in the quantity demanded. The demand curve is steeply sloping. So when the supply curve shifts outward, it will result in a much lower price, but relatively small ...
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