Does a good wheat harvest increase farmers' income? (Answer in terms of economics)

It will not increase income. From the economic paradox of a bumper harvest, grain cheap hurt farmers. A bumper grain harvest would have been good, but since the elasticity of demand for grain is relatively small and the price elasticity is relatively large, this causes the price to fall a lot during a bumper harvest, and the result is that farmers make even less money.

The harvest paradox is a very famous paradox in economics. The content is to imagine that a certain year nature is particularly kind to agriculture, the cold winter freezes pests, suitable for planting the spring came early, abundant rain in the summer to make the seedlings thrive, sunny fall and make the crops easy to harvest and transport. At the end of the year, the Jones family sits happily around the fire and calculates their income for the year. They were shocked by the results: the rare good year and the bumper harvest had left the family with less income than in previous years! His neighbors and other farmers in other parts of the country suffered the same fate.

This story is the famous "harvest paradox" in economics. The main cause of the paradox is the inelasticity of demand for basic food crops such as wheat: consumers are unresponsive to changes in the price of such products as food. A good harvest increases supply and lowers prices, but lower prices do not stimulate a large increase in demand. As a result, a good harvest reduces the total return to all farmers.

When the elasticity of demand for a good is greater than 1, we say that he is rich in elasticity, when the price falls, the revenue will increase; when the elasticity of demand is equal to 1, we say that he has a unit of elasticity, when the price falls, the revenue remains unchanged; when the elasticity of demand is less than 1, it is the lack of elasticity, when the price falls, the revenue will fall, which is the "Harvest Paradox This is the theoretical basis of the "harvest paradox".

What is the cause of the harvest paradox? Samuelson used the elasticity of demand to analyze this peculiar paradoxical phenomenon. He argues, "The answer lies in the elasticity of people's demand for food." Elasticity of demand is a concept that measures how responsive the quantity demanded is to price changes.

If the quantity demanded of a good responds strongly to price changes, the demand for that good can be said to be elastic; if the quantity demanded of a good responds little to price changes, the demand for that good can be said to be inelastic.

In general, necessities tend to be inelastically demanded, while luxuries tend to be elastically demanded. The main cause of the harvest paradox is the inelastic demand for basic food crops such as wheat and corn. Thus, in the case of these necessities, consumers are unresponsive to price changes in products like wheat and corn. This means that when harvests are good, the overall total return to farmers is lower than when harvests are bad. In other words, when harvests are good, supply increases and thus lowers prices, but lower food prices do not stimulate greater increases in demand. Therefore, a good harvest instead reduces the total return to all farmers.