Which of the following best describes the main problem faced by farms in the long run?
A. Lagging technology has decreased the productivity of farmers and therefore resulted in low
farm prices and incomes.
B. The highly inelastic nature of agricultural demand has caused small year-to-year
fluctuations in farm output to result in highly unstable farm incomes.
C. The supply of farm products has increased relative to the demand for them, and, because
demand is inelastic, farm prices and incomes have therefore declined.
D. The demand for farm products has increased relative to their supply, but the highly elastic
nature of agricultural demand has caused these shifts to result in declining farm incomes.
Answer: C
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The development of new products through research and development in new growth theory is important because
A) new patents are created. B) there can be a positive impact on future growth. C) society's scarce resources are being used when they could be used for current consumption. D) it will lead to a reduction in the savings rate.
You sign a contract to pay $1000 next year for the refrigerator you bought today. The rate of inflation is 10% and the real interest rate is 7%. Alternatively, you could pay $875 today. What should you do to save the most money?
What will be an ideal response?