Answer to Question #34873 in Economics of Enterprise for arunjyot idas
A good harvest will generally lower the income of farmers.” Elaborate this proposition using a supply-and-demand diagram?
When supply is relatively inelastic a change in demand affects the price more than the quantity supplied. The reverse is the case when supply is relatively elastic. A change in demand can be met without a change in market price. This also cause the total income to decrease.
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