Farm income has fallen in part because demand for farm products is price inelastic and income inelastic.

Question

Quizplus · Accepted Answer

The statement is true. Demand for farm products is price inelastic because people need to eat and are willing to pay a higher price for food; similarly, demand for farm products is income inelastic because even if people's incomes increase, they will still need to buy roughly the same amount of food. As a result, if farmers cannot increase their prices, their income will decline.

Farm Income Has Fallen in Part Because Demand for Farm