Answer to Question #70511 in Microeconomics for ritik

Question

explain a drought around the world raises the total revenue that farmers receives from the sale of grains but a drought only in punjab reduces the total revenue that farmers in punjab receive ?

Answer 1

With drought around the world, total income is rising for grain growers, as grain prices are rising substantially, as the level of harvested grain is reduced significantly and the grain will become more valuable. And for farmers in punjab, total income will decrease, then farmers will not be able to influence the world prices for grain, because the grain collected in punjab is a small part of the world's grain. And if the grain is reduced, the income will decrease.