Question

if the price elasticity of demand for food is less then 1 (inelastic), an increase in supply due to an improvement in technology will result in a ______ price and _______ in total revenue.

Answer 1

... an increase in supply due to an improvement in technology will result in a lower price and decrease in total revenue.

Step-by-step explanation:

Price Elasticity of Demand = % change in quantity demanded / % change in price

When elasticity < 1, % change in price will be larger than % change in quantity demanded.

Increase in supply means increase in quantity to be sold. There will be a larger decrease in price (Normally when price rises quantity demanded falls and vice versa)

Revenue = Price x Quantity => when price decreases more than quantity increases, revenue will fall