Because the demand for food is relatively price inelastic, what effects would you expect to see as a result of technological advances that reduce the cost of food production?

A) Food prices would rise, but farm incomes would decline.
B) Food prices would rise and farm incomes would rise.
C) Food prices would decline and farm incomes would decline.
D) Food prices would decline, but farm incomes would rise.

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Darian Smith · Accepted Answer

Final Answer : C, Explanation :  Technological advances that reduce the cost of food production typically lead to lower food prices due to decreased production costs. However, because the demand for food is relatively price inelastic, the quantity demanded does not increase significantly with the lower prices, leading to reduced revenue for farmers and thus declining farm incomes.

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