Consider the market for any agricultural commodity for which there exists a binding output quota and demand is inelastic.Any individual producer has a clear financial incentive to
A)produce a small amount beyond their individual quota amount.
B)leave the market.
C)give away their quota.
D)stop producing.
E)limit production of the commodity.

Question

Quizplus · Accepted Answer

When demand is inelastic, a small increase in supply (producing beyond the quota) can lead to a proportionally smaller decrease in price, potentially increasing total revenue for the producer.

Consider the Market for Any Agricultural Commodity for Which There