But does this discovery make farmers better off? As a first cut to answering this question, consider what happens to the total revenue received by farmers. Farmers' total revenue is P x Q the price of the wheat time the quantity sold. The discovery affects farmers in two conflicting ways. The hybrid allows farmers to produce more wheat (Q rises), but now each bushel of wheat sells for less (P falls).
Whether total revenue rises or falls depends on the elasticity of demand. In practice, the demand for basic foodstuffs such as wheat is usually inelastic, for these items are relative inexpensive and have few good substitutes. When the demand curve is inelastic, as it is in Figure 8,a decrease in price cause total revenue to fall. You can see this in the figure: The price of wheat falls substantially , whereas the quantity of wheat sold rise only slightly. Total revenue falls from $300 to $200. thus, the discovery of the new hybrid lower s the total revenue that farmers receive for the sale of their crops.