Question 4: In 2019 drought has reduced the amount of production of farm products in Australia by many billions of dollars. Source: Sullivan, Kath (2019). See link: https://www.abc.net.au/news/rural/2019-03-05/value-of- australian-farm-production-drops-abares-figures/10867294. At the same time the demand for farm products is generally considered to be price inelastic. Economics Online (2019). See link: https://www.economicsonline.co.uk/Competitive_markets/Pri mary_markets.html If the demand for farm products is price-inelastic, a reduction in farm production will increase farm revenues. Explain why this is so. Use a diagram to support your answer.

Question 4: In 2019 drought has reduced the amount of production of farm products in Australia by many billions of dollars. Source: Sullivan, Kath (2019). See link: https://www.abc.net.au/news/rural/2019-03-05/value-of- australian-farm-production-drops-abares-figures/10867294. At the same time the demand for farm products is generally considered to be price inelastic. Economics Online (2019). See link: https://www.economicsonline.co.uk/Competitive_markets/Pri mary_markets.html If the demand for farm products is price-inelastic, a reduction in farm production will increase farm revenues. Explain why this is so. Use a diagram to support your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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