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achalmers achalmers
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5 years ago

Question 1.

The demand for most farm products is relatively inelastic. All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

• Farm revenues increase.

• Farm revenues decrease.

• Farm revenues remain constant because consumers will not increase their consumption of farm products by much.

• Farm revenues could increase or decrease depending on the cost of this new equipment.

Question 2.

Suppose a frost destroys the tomato crop in California but farmers see an increase in their revenues. Which of the following best explains this?

• The decrease in supply led to huge price increases.

• Tomatoes are necessities.

• The demand for tomatoes is price inelastic.

• The cross-price elasticity between tomatoes and most other substitute vegetables is very low.
Textbook 
Microeconomics

Microeconomics


Edition: 7th
Authors:
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achalmers Author
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5 years ago
Thanks
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