Final answer:
The total revenue after a price increase in the market for coffee can increase, decrease, or remain unchanged depending on the demand elasticity. For coffee, with an elasticity of demand of about 0.3, a moderate price increase usually leads to an increase in total revenue due to inelastic demand. Correct option is A.
Step-by-step explanation:
The question is related to how changes in price impact the total revenue for coffee producers, given the demand for coffee is generally inelastic. With an elasticity of demand for coffee at about 0.3, a price increase results in a less-than-proportional decrease in quantity demanded.
In scenarios where supply decreases due to factors like poor weather, leading to higher prices, the total revenue of farmers may increase due to the inelastic demand. On the other hand, if supply increases significantly, causing a fall in prices, farmers' total revenue may decrease.
For inelastic goods like coffee, an increase in price typically leads to a smaller decrease in quantity demanded, and therefore, could result in an increase in total revenue (Scenario A). However, if the increase in price were extreme, it might lead to a larger decrease in quantity demanded, offsetting the price increase and resulting in a decrease in total revenue (Scenario B).