Suppose that the demand for corn is price inelastic. If a technological advance makes corn farms more productive, the equilibrium price of corn will ________ and the farmers' total revenue will ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease

Question

Quizplus · Accepted Answer

When demand is price inelastic, a decrease in price leads to a decrease in total revenue. A technological advance increases supply, causing the equilibrium price to fall, which decreases total revenue for inelastic demand.

Suppose That the Demand for Corn Is Price Inelastic