Suppose the demand curve for corn is inelastic between the current price and price that exists after the supply of corn falls.It follows that
A)fewer farmers are producing corn at the new price than at the old price.
B)the total revenue for corn is lower at the new price than at the old price.
C)the total revenue for corn is higher at the new price than at the old price.
D)more farmers are producing corn at the new price than at the old price.
E)a and c

Question

Quizplus · Accepted Answer

If the demand curve for corn is inelastic, then a decrease in supply will result in a relatively small change in the quantity demanded. Therefore, the total revenue (price x quantity) for corn will increase at the new, higher price because the quantity demanded will not fall as much as the price rises. This means that choice B is incorrect. As for choice A and D, it is unclear from the information provided whether the number of farmers producing corn has changed, as this would depend on the specific supply shocks that caused the decrease in supply. Therefore, the best choice is C, which is the only one that necessarily follows from the given information.

Suppose the Demand Curve for Corn Is Inelastic Between the Current