Exhibit 39-8 -Refer to Exhibit 39-8.Assume That E₁ Represents the Initial Equilibrium

question 85

Multiple Choice

Exhibit 39-8
-Refer to Exhibit 39-8.Assume that E₁ represents the initial equilibrium in the market for grain X.As a result of increased agricultural productivity,total revenues for farmers in this market will

• A)increase if the demand curve is perfectly inelastic.
• B)increase if the demand curve is inelastic between E₁ and E₂.
• C)decrease if the demand curve is inelastic between E₁ and E₂.
• D)decrease if the demand curve is inelastic between E₁ and E₃.
• E)none of the above

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Definitions:

Latent Defects

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Variable Rate Mortgage

A type of mortgage where the interest rate can change, based on an index or an agreement between the lender and borrower.

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Truth-in-Lending Act

Legislation from the federal government in the United States intended to support the well-informed utilization of consumer credit by mandating the disclosure of its conditions and costs.