The Demand for Most Farm Products Is Relatively Inelastic

question 16

Multiple Choice

The demand for most farm products is relatively inelastic.All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

• A)Farm revenues increase.
• B)Farm revenues decrease.
• C)Farm revenues remain constant because consumers will not increase their consumption of farm products by much.
• D)Farm revenues could increase or decrease depending on the cost of this new equipment.

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Definitions:

Stable Market Value

Refers to assets or securities that demonstrate low volatility and maintain their value over time in various market conditions.

Floating-Rate

An interest rate that fluctuates over time with the market or an index, commonly used in variable-rate loans and adjustable-rate mortgages.

Interest Rates

The percentage charged on borrowed money, or earned through lending money or making investments, over a specified period.

Income Bond

An income bond is a type of bond that only pays interest if the issuing company is profitable, making it a riskier investment than bonds with guaranteed interest payments.