If the Demand for Agricultural Output Is Highly Inelastic, an Improvement

question 132

Multiple Choice

If the demand for agricultural output is highly inelastic, an improvement in the technology used in the agricultural industry most likely will cause a:

• A) small drop in the price of agricultural output combined with a small increase in quantity.
• B) small drop in the price of agricultural output combined with a large increase in quantity.
• C) large drop in the price of agricultural output combined with a small increase in quantity.
• D) large drop in the price of agricultural output combined with a large decrease in quantity.

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Definitions:

Taxable Income

The amount of income subject to taxes, calculated by adjusting gross income for deductions, exemptions, and allowances, according to tax laws.

Deferred Income Tax Asset

A balance sheet item that represents taxes paid or carried forward but not yet realized on the income statement.

Net Operating Loss

The deficit that occurs when a business's expenses exceed its revenues, excluding taxes and certain other expenses, over a fiscal period.

Future Profitability

An estimation or outlook on the capacity of a business to generate earnings in future periods, often considered for investments or strategy planning.