Economics Multiple Choice Question – 15 August 2018

The price elasticity of demand for maize is 0.4. A new hybrid of maize is discovered and all farmers start to use it, which increases the quantity of maize they can produce from each acre.  What happens to the farmers’ total revenue?

Select ONE answer:

1. The total revenue will not change.
2. The total revenue will increase.
3. The total revenue will decrease.
4. There is not enough information to determine what happens to the total revenue.

Show your workings to arrive at your answer, and explain and justify your reasons: 

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is a multiple choice question is suitable for Economics KS5 classes.

The answer is 3

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