Question

because the demand for wheat tends to be inelastic, the development of a new technology would tend to...

decrease the supply of wheat.

increase the total revenue of wheat farmers.

decrease the demand for wheat.

decrease the total revenue of wheat farmers.

Explanation:

1. Analyze the effect of new technology on wheat: New technology in wheat production typically increases the supply (shifts supply curve right), so option "Decrease the supply of wheat" is wrong.
2. Analyze demand change: New technology doesn't directly decrease demand for wheat, so "Decrease the demand for wheat" is wrong.
3. Recall inelastic demand and total revenue: For inelastic demand (|Ed| < 1), when supply increases (due to new tech, leading to lower price), the percentage decrease in price is greater than the percentage increase in quantity demanded. Total revenue (TR = P Q) will decrease because the price effect outweighs the quantity effect. Wait, no—wait, new technology increases supply, so price falls. For inelastic demand, a price decrease leads to a less than proportional increase in quantity. So TR = PQ: if P falls more than Q rises, TR decreases. So the correct option should be "Decrease the total revenue of wheat farmers." Wait, let's recheck: Inelastic demand: %ΔQ < %ΔP (in absolute terms). If supply increases (so P decreases), then %ΔP is negative (price drop), %ΔQ is positive (quantity rise). Since |%ΔQ| < |%ΔP|, then TR = PQ. Let's take numbers: Suppose P1 = 10, Q1 = 100, TR1 = 1000. Demand is inelastic, say Ed = 0.5. If supply increases, price drops by 20% (P2 = 8), then quantity demanded rises by 10% (Q2 = 110). TR2 = 8110 = 880 < 1000. So TR decreases. So the new technology increases supply (lower price), with inelastic demand, so total revenue of farmers decreases. So the correct option is "Decrease the total revenue of wheat farmers."

Wait, but let's check the options again:

• "Decrease the supply of wheat": New tech increases supply, so wrong.
• "Increase the total revenue of wheat farmers": For inelastic demand, price drop leads to TR decrease, so wrong.
• "Decrease the demand for wheat": New tech doesn't decrease demand, so wrong.
• "Decrease the total revenue of wheat farmers": Correct, as explained.

Answer:

D. Decrease the total revenue of wheat farmers. (Assuming the options are labeled A, B, C, D as per the order: A. Decrease the supply of wheat. B. Increase the total revenue of wheat farmers. C. Decrease the demand for wheat. D. Decrease the total revenue of wheat farmers.)