Question 31EconomicsJAMB

What is the effect of inelastic demand for agricultural products on the income of a farmer?

A

a price rise results in its fall

B

a price fall results in its fall

C

a price fall results in its rise

D

a price rise leaves the income unchanged

Step-by-Step Explanation

Inelastic demand for agricultural products means that consumers will not significantly reduce their quantity demanded even if prices rise. Therefore, when prices increase, the total revenue generated by farmers may not rise as expected, leading to a decrease in income due to reduced sales volume. This situation occurs because the higher prices can drive some consumers out of the market, ultimately lowering overall income for the farmer.

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