The suggestion that peasants in Africa have backward-bending supply curves of output implies that their response to an increase in the price of their crops will be to?
a
increase their output
b
decrease their output
c
keep their output constant
d
hoard their output
Explanation
Correct Option
aNo explanation available
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OLUMYSCHOOL
1 year ago
THE ANSWER IS B AND NOT A BECAUSE WE HAVE ITS AN EXAMPLE OF EXCEPTIONAL DEMAND WHERE BY AN INCREASE IN PRICE WILL LEAD TO A DECREASE IN SUPPLY, THAT IS IF THERE IS AN INCREASE IN PRICE THE OUTPUT LET'S SAY LABOUR WILL INCREASE IN THE PRODUCTION OF OUT PUT BUT LATER THE OUTPUT WILL DECREASE BECAUSE LABOUR FEELS THAT IF THERE IS AN INCREASE OR DECREASE IN OUTPUT HIS WAGES WILL STILL BE INCREASED, THEREBY INCREASING LEISURE HOUR AND DECREASING WORKING OUR AMOUNTING TO DECREASE IN OUTPUT.
