Exhibit 39-8
-Refer to Exhibit 39-8.Assume that E₁ represents the initial equilibrium in the market for grain X.If all the farmers agree to restrict production and abide by the agreement,

Question

Exhibit 39-8 -Refer to Exhibit 39-8.Assume that E₁ represents the initial equilibrium in the market for grain X.If all the farmers agree to restrict production and abide by the agreement,

Quizplus · Accepted Answer

If all farmers agree to restrict production, this will shift the supply curve to the left, resulting in a higher equilibrium price (A) and a lower equilibrium quantity (B). If the demand curve is inelastic, the increase in price will result in a more than proportionate increase in total revenues (C). Therefore, all of the above options are correct.

Exhibit 39-8 -Refer to Exhibit 39-8.Assume That E1 Represents the Initial Equilibrium

Exhibit 39-8 -Refer to Exhibit 39-8.Assume That E₁ Represents the Initial Equilibrium