An agricultural corn market faces a positive supply shock due to a beneficial rainy season and the use of new genetically modified seeds. As a result, farmers face the largest crop harvest in decades. Which answer below explains how a farm could actually go bankrupt under this scenario
A) The elasticity of supply for corn is elastic such that a positive shock reduces total revenue.
B) The demand for corn is inelastic such that a positive supply shock reduces total revenue.
C) An inelastic demand curve will cause revenue to fall because price decreases by more than the increase in quantity demanded.
D) B and C
D
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George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is
a. $6. b. $10. c. $16. d. $26.
How can fighting inflation cause a recession?
A. The Federal Reserve raises interest rates to intentionally slow down the economy. B. Businesses lay off workers as a way to keep prices from rising too fast. C. Households stop buying goods and services in response to higher prices. D. The federal government orders businesses to reduce prices, which raises interest rates.