uls tu ensüre that consumers gets a fair deal.\" Do you agree or disagree wit WE
ID: 1218147 • Letter: U
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uls tu ensüre that consumers gets a fair deal." Do you agree or disagree wit WEnsure that consumers gets a fair deal" Do you agree or disagree with each part of this statement? Explain how you might go about testing the parts of the statement that are positive and lay bare the normative par ts Use the following information to wok resiblers 7 and . Almonds galore! The quantity of almonds harvested i 2008-2009 wss expected to increase by 22 percent, while total receipts of growers was expected to increase by 17 percent. Souree: Almond Board of California 7. Was the price of almonds expected to rise or fsi? Did a change in the supply of or demand for almonds bring about this expected change in the price? 8. If the price of almonds changed as a result of a change in the supply of almonds, is the demand for almonds elastic or inelastic? Explain your answer.Explanation / Answer
(8)
Whether or not demand is elastic or inelastic is judged from price elasticity of demand which is defined as
Price elasticity of demand = % Change in quantity demanded / % Change in price.
Demand is inelastic (inelastic) if absolute value of price elasticity of demand is less than (more than) 1.
Here, if price has changed due to a change in supply, we cannot conclude whether demand is elastic or inelastic. We can conclude about demand only if price had changed in response to a change in quantity demanded.
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