For each of the following scenarios, decide whether you agree or disagree, and then explain your...

For each of the following scenarios, decide whether you agree or disagree, and then explain your answer.

(a) Paddy farmers suffer declines in their total revenues when they become more productive as a group. [4 marks]

(b) Suppose the elasticity of demand for cocaine is -0.1 and the government succeeds in reducing supply substantially. As a result, buyers will now spend less on cocaine. [3 marks]

(c) Every Chinese New Year, vendors bring thousands of Chinese red lanterns to Myanmar. During the last two years, the market has been very competitive; as a result, price has fallen by 30 percent. If the price elasticity of demand were -2.0, vendors would lose revenues as a result of the price reduction. [3 marks]

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Rahul Sunny answered 1 year ago

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