A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought.Which of the following best describes the effect on corn farmers in Minnesota,where sufficient rainfall occurred?
A)Their revenue increases because price increases and demand is elastic.
B)Their revenue increases because price increases and demand is inelastic.
C)Their revenue decreases because price decreases and demand is inelastic.
D)Their revenue decreases because price increases and demand is elastic.

Question

Quizplus · Accepted Answer

Since there was sufficient rainfall in Minnesota, corn farmers would have been able to produce a good yield. However, the drought in Wisconsin would have reduced the overall supply of corn, leading to an increase in price. As a result, Minnesota farmers who can supply to the market would benefit from higher prices, and since the demand for corn is relatively inelastic (people cannot easily switch to other foods), their revenue would also increase.

A Recent News Report Lamented the Plight of Corn Farmers