If the Demand Curve for Agricultural Products Is Elastic and Farmers

question 32

Multiple Choice

If the demand curve for agricultural products is elastic and farmers as a group become more productive,then prices of agricultural goods will __________ and total revenue earned by farmers will __________.

• A)decrease;increase
• B)decrease;decrease
• C)increase;increase
• D)increase;decrease
• E)We cannot answer this question without knowing how elastic the demand curve is.

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Definitions:

Installment Contracts

Agreements where payments are made in a series of increments over time in exchange for goods or services.

Conditional Sales Contract

A contract agreement where the buyer takes possession of an item, but its formal ownership and title remain with the seller until the purchase price is paid in full.

Machinery

Physical devices or machines, often powered, that are used in manufacturing processes or to perform various tasks in industries.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower defaults on the repayment terms.