The short answer is yes. That is because it is possible to have a situation where individual farmers, and farmers as a whole, can increase supply but still earn less income than before. How can this be? The answer lies with the elasticity of supply and demand and the equilibrium price.
Suppose that a new technological breakthrough allows farmers to produce 20% more, in this case, wheat per acre than before. This new development allows the individual farmer to produce more than before at every price. Therefore, the supply curve for the farmer will shift to the right.
If the farmer can produce more it would seem he or she will be unambiguously better off than before. Nevertheless, that is not necessarily the case. Whether he or she is better off than before, that is, earning a greater income than before will depend on the elasticity of the demand curve, which in turn will depend on the nature of the wheat market.
The short answer is yes. That is because it is possible to have a situation where individual farmers, and farmers as a whole, can increase supply but still earn less income than before. How can this be? The answer lies with the elasticity of supply and demand and the equilibrium price.Suppose that a new technological breakthrough allows farmers to produce 20% more, in this case, wheat per acre than before. This new development allows the individual farmer to produce more than before at every price. Therefore, the supply curve for the farmer will shift to the right.If the farmer can produce more it would seem he or she will be unambiguously better off than before. Nevertheless, that is not necessarily the case. Whether he or she is better off than before, that is, earning a greater income than before will depend on the elasticity of the demand curve, which in turn will depend on the nature of the wheat market.
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