Asked by Quintin Volpe on May 10, 2024
Verified
Farmers often find that large bumper crops are associated with declines in their gross incomes. This suggests that
A) farm products are normal goods.
B) farm products are inferior goods.
C) the price elasticity of demand for farm products is less than 1.
D) the price elasticity of demand for farm products is greater than 1.
Bumper Crops
An exceptionally large crop yield, often much higher than average.
Gross Incomes
The total income received before any deductions or taxes are applied.
Price Elasticity of Demand
The evaluation of how the quantity demanded for a product is influenced by price movements.
- Comprehend the principle of supply elasticity and the methods used for its measurement.
- Associate elasticity theories with applicable instances, like the consequences on minimum wage levels and earnings in agriculture.
Verified Answer
SP
Sharma PratimaMay 12, 2024
Final Answer :
C
Explanation :
The decline in gross income despite large bumper crops suggests that the price elasticity of demand for farm products is less than 1, meaning that the percentage decrease in price is greater than the percentage increase in quantity demanded, leading to a decrease in total revenue.
Learning Objectives
- Comprehend the principle of supply elasticity and the methods used for its measurement.
- Associate elasticity theories with applicable instances, like the consequences on minimum wage levels and earnings in agriculture.