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JAMB Economics 1992 Question 26

Question 26

Agriculture

Farmers' income may fall if they produce more cash crops for export because

  1. A.foreign demand is inelastic
  2. B.the price of the crops will rise
  3. C.of domestic currency depreciation
  4. D.of export duties
Show the answer and explanation

Answer: A (foreign demand is inelastic)

Explanation

With inelastic demand, more supply causes a large fall in price, so total earnings fall.