Suppose that when the price of corn is $2 per bushel, farmerscan sell 10 million bushels. When the price of corn is $3 perbushel, farmers can sell 8 million bushels.
Which of the following statements is true.
a. The demand for corn is income inelastic, and so an increasein the price of corn will increase the toral revenue of cornfarmers.
b. the demand for corn is income elastic and so an increase inthe price of corn will increase the total revenue of cornfarmers.
c. The demand for corn is price inelastic, and so an increasein the price of corn will increase the total revenue of cornfarmers.
d. The demand for corn is price elastic, and so an increase inthe price of corn will increase the total revenue of cornfarmers.

Price elasticity of demand refers to how responsive the demand for a product is to changes in price. Demand is described as elastic if a small change in price causes a significant difference in its demand. Inelastic demand is when changes in the price had little impact on demand.

For the corn farmers, the demand for corn is price elastic as a change in price from $2 to $3 causes the demand to decrease. The demand for corn is price sensitive. Farmers will earn more when the price is high. At the price of $2, the demand is 10 million, earning farmers $20 million. At the price of $3, the demand is 8milion, earning the farmers $24 million