Answer to Question #46660 in Microeconomics for Felisia
A good harvest will generally lower the income of farmers illustrate this proposition using a supply and demand diagram?
If the demand for harvest is inelastic, the farmer's income will really decrease with the increase of the harvest. If farmer’s harvest becomes better, its supply increases, but demand doesn’t change. In this situation market equilibrium moves too. Price falls and quantity of goods grows. This changes cause farmer’s income to change. Farmer’s income generally become lower, if the demand is inelastic, because in this situation price changes more, than quantity of sold goods.