A bountiful wheat harvest can be bad news for wheat farmers because the

Question

Quizplus · Accepted Answer

When the supply of wheat increases due to a bountiful harvest, the supply curve shifts to the right, leading to a decrease in the equilibrium price of wheat. However, since the demand for wheat is usually inelastic, the decrease in price does not lead to a proportionate increase in quantity demanded. As a result, the total revenue earned by wheat farmers may decrease, even though they are producing more wheat. This is why a bountiful wheat harvest can be bad news for wheat farmers.

A Bountiful Wheat Harvest Can Be Bad News for Wheat