The Following Question Are Based on the Following Graph

question 39

Multiple Choice

The following question are based on the following graph. The curves D and S represent the market demand and supply curves for farm products in 1960. The curves D₁ and S₁ represent the market demand and supply curves for farm products in 2000. It is supposed that there were no support programs in either year.

-The relative insensitivity of the supply curve to price can best be explained by the fact that

• A) the quantity of food demanded does not vary much with the price of food because food is a necessity.
• B) consumption of food per capita faces natural limits and hence responds by only a small amount to changes in per capita income.
• C) farmers have only limited control over their outputs in the short run.
• D) there has been rapid technological change in agriculture.
• E) poor climatological conditions led to decreasing harvests.

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Definitions:

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