Question

The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will have _____ prices, _____ quantities sold, and _____ incomes.

Answer 1

a. lower prices, greater quantities sold, and lower incomes.

Step-by-step explanation:

The options to this question weren't provided. Here are the options :

a. lower prices, greater quantities sold, and lower incomes.

b. lower prices, greater quantities sold, and higher incomes.

c. lower prices, lower quantities sold, and lower incomes.

d. higher prices, higher quantities sold, and higher incomes.

Demand is price inelastic if a small change in price has little or no effect on quantity demanded.

Due to the bumper harvest, the supply of agricultural products would exceed its demand. This would lead to an excess of supply over demand and prices would fall. The fall in price would increase the quantity demanded of agricultural products. But the fall in price would be greater than the increase in Quanitity demanded because demand is inelastic, so, income would fall.

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