An increase in the supply of grain will reduce the total revenue grain producers receive if a. the supply curve is inelastic. b. the supply curve is elastic. c. the demand curve is... An increase in the supply of grain will reduce the total revenue grain producers receive if a. the supply curve is inelastic. b. the supply curve is elastic. c. the demand curve is inelastic. d. the demand curve is elastic.
Understand the Problem
The question is asking about the relationship between supply curve elasticity and total revenue for grain producers, requiring us to identify how changes in supply impact revenue based on elasticity of demand or supply.
Answer
The demand curve is inelastic.
The final answer is that the demand curve is inelastic.
Answer for screen readers
The final answer is that the demand curve is inelastic.
More Information
When the demand curve is inelastic, consumers do not significantly reduce their demand even as prices drop. Therefore, an increase in supply, which lowers prices, results in reduced total revenue because the proportional drop in price is greater than the increase in quantity sold.
Tips
A common mistake is confusing elasticity of demand with that of supply. Always consider the responsiveness of quantity demanded to changes in price.
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