Exhibit 39-5

-Refer to Exhibit 39-5.Low price elasticity of demand for corn coupled with unpredictable weather makes both price and total revenue in the market for corn extremely volatile.Which of the supply curves would result in the least volatility?
A) S1.
B) S2.
C) S3.
D) The changes are not dependent upon elasticity of supply.

Question

Exhibit 39-5
 
-Refer to Exhibit 39-5.Low price elasticity of demand for corn coupled with unpredictable weather makes both price and total revenue in the market for corn extremely volatile.Which of the supply curves would result in the least volatility?
A) S1. 
B) S2. 
C) S3. 
D) The changes are not dependent upon elasticity of supply.

Quizplus · Accepted Answer

Supply curve S3 represents a more inelastic supply, which means that changes in demand will have a smaller effect on the price of corn. This leads to lower volatility in both price and total revenue in the market.

Exhibit 39-5 -Refer to Exhibit 39-5.Low Price Elasticity of Demand for Corn