Suppose that when the price of corn is $2 per bushel,farmers can sell 10 million bushels.When the price of corn is $3 per bushel,farmers can sell 8 million bushels.Which of the following statements is true?
A) The demand for corn is income inelastic,and so an increase in the price of corn will increase the total revenue of corn farmers.
B) The demand for corn is income elastic,and so an increase in the price of corn will increase the total revenue of corn farmers.
C) The demand for corn is price inelastic,and so an increase in the price of corn will increase the total revenue of corn farmers.
D) The demand for corn is price elastic,and so an increase in the price of corn will increase the total revenue of corn farmers.

Question

Quizplus · Accepted Answer

If the price of corn increases from $2 to $3, the percentage change in price is 50%, while the percentage change in quantity demanded is only -20%, indicating that the demand for corn is price inelastic. As a result, an increase in the price of corn will lead to an increase in total revenue for corn farmers, since the increase in price will more than offset the decrease in quantity sold. Therefore, choice C is the correct answer.

Suppose That When the Price of Corn Is $2 Per