Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to ?
Correct answer: D. reduce total revenue to farmers as a whole because the demand for food is inelastic
- A. increase total revenue to farmers as a whole because the demand for food is elastic
- B. increase total revenue to farmers as whole because the demand for food is inelastic
- C. reduce total revenue to farmers as a whole because the demand for food is elastic
- D. reduce total revenue to farmers as a whole because the demand for food is inelastic
Explanation
Food demand is generally price inelastic, so a technology-driven increase in supply causes price to fall proportionately more than quantity sold rises. Farmers’ total revenue therefore tends to decline.
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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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