Question

Americans spend more money on strawberries than any other fresh fruit except apples and most of these strawberries are produced in California. Suppose the Sumner Strawberry Farm is a typical California strawberry farm. The Sumner farm leases 50 acres of strawberry fields and waters the fields using an elaborate drip irrigation system. The cost of leasing the farm and its equipment is $350 thousand a year. Mr. Sumner also has to hire farm workers to harvest the fields and package the strawberries for the market. Strawberry pickers in California are hired at will, meaning that Mr. Sumner can fire strawberry pickers at any time without explanation.

If market demand for strawberries is inelastic then the demand for the strawberries of the Sumner Strawberry Farm will be _______.

A. perfectly inelastic
B. equal to the elasticity of the market demand curve
C. perfectly elastic
D. slightly less elastic than the market demand curve

Answer 1

The demand for the strawberries of the Sumner Strawberry Farm will be slightly less elastic than the market demand curve. So, the correct answer is option d.

Step-by-step explanation:

The demand for the strawberries of the Sumner Strawberry Farm will be slightly less elastic than the market demand curve.

When the market demand for strawberries is inelastic, it means that a change in price will have a relatively small impact on the quantity demanded. Therefore, the demand for the strawberries produced by the Sumner farm will also be less elastic, but still slightly more elastic than the market demand curve.

So, the correct answer is option d.