ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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elastic.
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unitary elastic.
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inelastic.
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perfectly elastic.
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Detailed explanation-1: -Demand for most farm products is inelastic. People can consume only so much then they are satiated. Even if price drops they will not buy much more. When demand is inelastic a drop in price that spurs more quantity being sold results in lower revenue and profit for the producer.
Detailed explanation-2: -Once a crop is seeded, for example, farmers have limited ability to alter the quantities they put on the market. Therefore, in the short-term, market supply is relatively inelastic or unresponsive.
Detailed explanation-3: -Answer and Explanation: The correct answer is (C) stay the same. This means that as the price of farm products change, there will be no change on quantity demanded.
Detailed explanation-4: -The elasticity of production which is the degree of responsiveness of the output to a unit change in input used was computed using the Cobb Douglas function. The coefficients of the independent variable (Xi) of the Cobb Douglas function were the direct elasticities of production.
Detailed explanation-5: -The concept of elasticity of demand is important in the determination of wages of a particular type of labor. If the demand for labor in an agribusiness industry is elastic, strikes and other trade union tactics will not be of any avail in raising wages.