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

Question

Quizplus · Accepted Answer

The decrease in farm revenues despite increased productivity suggests that the demand for many agricultural products is inelastic, meaning that price changes have little effect on consumers' demand for the products. If demand were elastic, we would expect lower prices to lead to a larger increase in demand, offsetting the decrease in revenues from lower prices. The other answer choices do not adequately explain the situation.

Increases in Farm Productivity Have Lowered the Prices of Manyagricultural