If demand for farm crops is inelastic, a good harvest will cause farm revenues to
A) increase because of the increase in the quantity that farmers can sell.
B) increase because of a downward movement along the supply curve, encouraging an increase in demand.
C) decrease because of a percentage fall in price that is greater than the percentage increase in quantity sold.
D) remain unchanged, because the increase in quantity that can be sold will be matched by an equal decrease in price.

Question

Quizplus · Accepted Answer

When demand is inelastic, a good harvest increases supply, leading to a larger percentage drop in price than the percentage increase in quantity sold, thus decreasing total revenue.

If Demand for Farm Crops Is Inelastic, a Good Harvest