Increases in farm productivity have lowered the prices of many agricultural products. Farm revenues decreased, which implies the:
A) demand for many agricultural products is inelastic.
B) costs of production increased.
C) demand for many agricultural products is elastic.
D) costs of production stayed the same.

Question

Quizplus · Accepted Answer

When demand is inelastic, a decrease in price leads to a proportionally smaller increase in quantity demanded, resulting in lower total revenue.

Increases in Farm Productivity Have Lowered the Prices of Many