Suppose Land Suitable for Wheat Production Is Highly Inelastic

question 3

Multiple Choice

Suppose land suitable for wheat production is highly inelastic. An increase in the demand for wheat bread will most likely

• A) cause the prices of bread and wheat to increase but not affect the incomes paid to owners of wheat-growing land.
• B) shift the demand curve for bread to the right and the supply curve for wheat to the left.
• C) raise the price of land suitable for wheat production.
• D) depress the incomes of owners of wheat growing land.

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Definitions:

Gross Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold; it measures a company’s production efficiency.

Sales Revenue

The income received by a company from its sales of goods or the provision of services.

Product Costs

The total costs directly tied to the creation of a product, including raw materials, labor, and overhead expenses.

Periodic Inventory System

An inventory accounting system that records the inventory levels and cost of goods sold (COGS) at the end of an accounting period, not tracking each sale or purchase individually.