Which of the following circumstances will raise the total revenue of oat farmers?
A)A good harvest,combined with inelastic demand.
B)A poor harvest,combined with inelastic demand.
C)A poor harvest,combined with elastic demand.
D)A good wheat and oat harvest,combined with inelastic demands.
E)A poor wheat and oat harvest,combined with elastic demands.

Question

Quizplus · Accepted Answer

A poor harvest combined with inelastic demand will raise the total revenue of oat farmers because the reduced supply will lead to higher prices, and because the demand is inelastic, consumers will continue to buy almost the same amount despite the price increase, leading to higher total revenue.

Which of the Following Circumstances Will Raise the Total Revenue