Asked by Brianna Baldwin-Hayes on Jun 17, 2024
Verified
Which of the following statements best describes the demand for agricultural commodities?
A) It takes a small decline in price to induce a large increase in the amount of agricultural products demanded.
B) The marginal utility of additional units of agricultural output diminishes very rapidly.
C) Small increases in income cause demand to increase by a proportionately larger amount.
D) When price declines, the resulting substitution effect is very large.
Demand
The quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.
Agricultural Commodities
Raw products derived from farming, ranching, and forestry which are traded on commodities markets, such as grains, livestock, and dairy products.
- Explore the dynamics of demand elasticity for agricultural items and how it affects farmers' profits.
Verified Answer
SS
Sydnee SmithJun 21, 2024
Final Answer :
B
Explanation :
The demand for agricultural commodities is characterized by the principle that the marginal utility of additional units of agricultural output diminishes very rapidly. This means that as more units of an agricultural product are consumed, the additional satisfaction (utility) gained from consuming each additional unit decreases. This principle is fundamental in understanding consumer behavior towards agricultural products, where beyond a certain point, consuming more of the product adds very little to consumer satisfaction.
Learning Objectives
- Explore the dynamics of demand elasticity for agricultural items and how it affects farmers' profits.
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