Question

explain why the following might be true a drought around the world raises the total revenue that farmers receive from the sale of grain but a drought only in Kanas farmers recieve​

Answer 1

Answer:

The demand for the world grain is relatively inelastic, while the demand for the Kansas grain is relatively more elastic. As a worldwide drought reduces the supply of the world grain, the world price of grain rises significantly and the quantity of grain falls insignificantly. Therefore, total revenue that world farmers receive rises. On the other hand, as a drought only in Kansas reduces the supply of Kansas grain, the price of grain rises insignificantly and the quantity falls significantly. Therefore, total revenue that Kansas farmers receive falls.

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