# A general drought in the world, raises the total income that farmers receive?

I need to write 6-7 lines explaining why is the following statement true:

A drought around the world raises the total revenue that farmers
receive from the sale of grain, but a drought only in
Kansas reduces the total revenue that Kansas farmers
receive.


I have few answers in my mind, but I have no economy training so it's really difficult for me to express my self using economic terms.

Is anyone kind to provide me a comprehensive answer.

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• I just posted the answer. – Adrian George Jan 10 '15 at 21:09

## 1 Answer

The demand for the world grain is relatively inelastic, while the demand for the Kansas grain is relatively more elastic. As a worldwide drought reduces the supply of the world grain, the world price of grain rises significantly and the quantity of grain falls insignificantly. Therefore, total revenue that world farmers receive rises. On the other hand, as a drought only in Kansas reduces the supply of Kansas grain, the price of grain rises insignificantly and the quantity falls significantly. Therefore, total revenue that Kansas farmers receive falls.

• You have no basis of saying that in a worldwide drought "the quantity of grain falls insignificantly". It may very well "fall significantly". So you have to weave into your argument about the world-wide drought case the fact/assumption that "demand is relatively inelastic". – Alecos Papadopoulos Jan 11 '15 at 3:39