The discovery of a new hybrid wheat would tend to increase the supply of wheat. Under what conditions would wheat farmers realise an increase in revenue?

Question

BlackTom AI · Accepted Answer

Start by restating what the question is asking: a new hybrid wheat increases the overall supply of wheat, so under what condition would wheat farmers see higher revenue as a result?
Option 1: 'if the demand for wheat is elastic' - This is the key idea. When demand is elastic, consumers are responsive to price changes, so a drop in price due to the larger supply leads to a proportionally larger increase in quantity sold. The total revenue (price times quantity) rises because the percentage increase in quantity outweighs the percentage drop in price.
Option 2: 'if the supply of wheat is elastic' - Elasticity of supply describes how much quantity supplied responds to price changes. While elastic supply could affect how much quantity increases, it does not determine whether revenue rises. Revenue depends on the price-quantity move for a given demand curve; supply elasticity alone does not guarantee higher revenue.
Option 3: 'if the demand for wheat is inelastic' - When demand is inelastic, consumers are not very responsive to price changes. A price decrease due to a supply increase would cause only a small rise in quantity, so the overall revenue would likely fall or change little. Inelastic demand tends to reduce revenue when price falls.
Option 4: 'if the supply of wheat is inelastic' - Inelastic supply means quantity doesn’t rise much when price changes. Even with a price drop from increased supply, the small gain in quantity would not compensate for the lower price, making revenue unlikely to rise. This makes it an unfavorable condition for higher revenue.
To summarize the reasoning across options: the critical factor for revenue to increase when supply expands is that the quantity sold must rise enough to offset the lower price, which occurs when demand is elastic. The other options misstate the role of demand or supply elasticities in determining revenue outcomes under a supply shift.

The discovery of a new hybrid wheat would tend to increase the supply of wheat. Under what conditions would wheat farmers realise an increase in revenue?

查看解析

登录即可查看完整答案

类似问题

When there are many substitute products available, the price elasticity of demand for a given product will likely be Blank ______.

When a 10 percent decrease in price results in a less than 10 percent increase in quantity sold, the demand for the product or service is described as Blank ______.

If the absolute value of the price elasticity of demand for good X is 0.5, then a 10% decrease in the price of good X will result in which of the following?

The own-price elasticity of Starbucks coffee is -0.8, meaning __.

There are many different factors that impact the price elasticity of demand. More specifically, the proportion of budget and the income effect refer to how price as a portion of income influences price elasticity. Which of the following is true

Rock melon has a price of elasticity of demand of (-)2.95, it can be concluded that the demand for rock melons is ___________.

Shoes are priced at $75 per pair. A vendor sells 20 pairs per day. The vendor explores selling at $100 per pair. At that price, the vendor sells 15 pairs over the day. What is the elasticity of shoe sales to price.

A luxury handbag brand raises prices by 10% but experiences only a 2% drop in volume. Demand is:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单