Question

Suppose the supply of tomatoes in California significantly increased this year. As a result, would you expect the total revenue from the sale of tomatoes to rise or fall if a) demand for tomatoes is inelastic b) demand for tomatoes is elastic

Answer 1

Answer:A) INSIGNIFICANT CHANGE IN REVENUE.

B) TOTAL REVENUE WILL FALL

Explanation: When a product has an inelastic Demand that means the demand for the product does not change with price. For a product like tomatoes whose Demand does not change with either with increased supply or price,their will be no significant change in Revenue.

If the demand for tomatoes is elastic,the total Revenue will fall as a result of Increase in supply of the commodity,as an increase in supply will cause the producers to sell below the equilibrium price.