passwella.
Menu

JAMB Economics 2000 Question 27

Question 27

Elasticity

Increased output will cause farmers' revenue to decrease when market demand is

  1. A.elastic
  2. B.inelastic
  3. C.unitary elastic
  4. D.perfectly elastic.
Show the answer and explanation

Answer: B (inelastic)

Explanation

More output lowers the price. When demand is inelastic, the price falls by a bigger percentage than sales rise, so revenue falls.