Question

Why is bad weather sometimes good news for farmers?

a. bad weather increases both the demand for and supply of agricultural products.
b. bad weather shifts the supply curve of agricultural products leftward, driving down price, and raising total revenue (assuming demand is elastic).
c. bad weather increases the demand for and price of agricultural products.
d. bad weather shifts the supply curve of agricultural products leftward, driving up price and total revenue (assuming demand is inelastic)?

Answer 1

(D) is the most correct answer. When the weather is bad, this will shift the supply curve of (mostly inelastic) farm goods to the left. This will, in turn, raise the equilibrium price that farmers will be able to receive for the products. All else equal, this will raise the overall profit that the farmers will receive, even in times of bad weather.