Increased output will cause farmers' revenue to decrease when market demand is?
Question 1 Report
Increased output will cause farmers' revenue to decrease when market demand is?
Answer Details
When market demand is elastic, it means that buyers are sensitive to changes in price. Therefore, if farmers increase their output, they will have to lower their prices to sell all their goods. As a result, their revenue will decrease because the decrease in price will not compensate for the increase in quantity. In contrast, when market demand is inelastic, buyers are less sensitive to price changes. In this case, if farmers increase their output, they can maintain or even increase their revenue by raising their prices, as the demand for their products remains relatively constant.
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