Good news for farming can be bad news for farmers because the
A)supply curve for an individual farmer is usually perfectly elastic.
B)supply curve for an individual farmer is usually perfectly inelastic.
C)demand for basic foodstuffs is usually inelastic,meaning that factors that shift supply to the right decrease total revenues to sellers.
D)demand for basic foodstuffs is usually elastic,meaning that factors that shift supply to the right increase total revenues to sellers.

Question

Quizplus · Accepted Answer

When the demand for basic foodstuffs is inelastic, an increase in supply (which is good news for farming) will lead to a decrease in total revenues for farmers because the price decrease resulting from the increased supply will not be enough to stimulate enough demand to compensate for the increased supply. This means that while the total quantity sold will increase, the total revenue earned will decrease. Therefore, option C is the correct answer.

Good News for Farming Can Be Bad News for Farmers