Will the improvement have no effect on food sales revenues

Reference no: EM133630278

Question: Consider the market for food. Studies indicate that the demand for food is price inelastic at current equilibrium market prices. Also assume that neither the demand or the supply curve are perfectly inelastic or perfectly elastic. Now, suppose that a technological improvement was introduced that enabled suppliers to produce more food at a lower cost. Put another way, whatever it cost to produce say, q* units before the technological improvement, after the technological improvement, it now costs less. Given what we know about this market, would this technological lead to increases in food sales revenues or decreases in food sales revenues, or will the improvement have no effect on food sales revenues?

Reference no: EM133630278

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