Agricultural prices tend to be unstable because ?
Correct answer: D. Demand and supply are price inelastic
- A. Supply is price elastic
- B. Demand is price elastic
- C. Supply is stable
- D. Demand and supply are price inelastic
Explanation
Agricultural demand and supply are often relatively inelastic, so a small harvest or demand change can cause a large price movement. This makes farm prices more volatile than prices in markets with more elastic responses.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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