When technological advancements in agriculture cause the supply curve for agricultural products to shift rightward, what is the likely effect on the total revenue earned by farmers?

Show Answers

Farmers' total income rises because food demand responds strongly to price changes.Farmers' overall earnings increase due to the low sensitivity of food demand to price variations.Farmers experience a decline in total revenue since food demand is highly sensitive to price fluctuations.Farmers' total revenue decreases because the demand for food is not very responsive to price changes.Farmers' total revenue remains unchanged regardless of supply shifts.

Explanation

When technological improvements increase supply, prices tend to fall. If the demand for food is inelastic, meaning consumers do not significantly increase their quantity demanded in response to lower prices, total revenue for farmers will decline. Therefore, a rightward shift in supply reduces farmers' total revenue when food demand is inelastic.