Because farm products have a low elasticity of demand a small change in farm output will have A) An indeterminate effect on price B) No effect on price C) A smaller effect on price D) A larger effect on price

Economics Dec 18, 2020

Because farm products have a low elasticity of demand a small change in farm output will have

A) An indeterminate effect on price

B) No effect on price

C) A smaller effect on price

D) A larger effect on price

Expert Solution

D) A larger effect on the price

Due to low elasticity of demand for agricultural products, a small change in farm supply will result in a larger impact on the price. On the graph below, a fluctuation in farm output from Qe to Q1 causes a larger change in price, Pe to P1.

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