The diagram illustrates the demand curve for an agricultural commodity with unitary elasticity. S1 is the supply curve when there is a bad harvest, while S2 is the supply curve when there is a good harvest. What action should the government take to ensure that farmers' total revenue stays unchanged?
- Aallow the price of the commodity to be determined by the market
- Bfix the price paid to farmers at price OP
- Cintroduce a quota on production equal to OQ
- Dprovide subsidies in bad years and impose indirect taxes in good years