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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