An increase in the supply of corn will lower the total revenue from corn if
A)the demand curve for corn is inelastic between the current and new price of corn.
B)the demand curve for corn is elastic between the current and new price of corn.
C)there are many substitutes for corn.
D)there are only a few substitutes for corn.
E)none of the above

Question

Quizplus · Accepted Answer

If the demand for corn is elastic, an increase in supply will lead to a relatively large decrease in price, and therefore a decrease in total revenue. This is because the increase in supply will cause the price to drop more than proportionately to the increase in quantity, leading to a decrease in the total revenue earned from selling corn.

An Increase in the Supply of Corn Will Lower the Total