Suppose that the price of peanuts falls from $3 to $2 prebushel and that, as a r

Question

Suppose that the price of peanuts falls from $3 to $2 prebushel and that, as a result, the total revenue received by peanutfarmers changes from $16 to $14 billion. Thus: A.the demand for peanuts is elastic. B.the demand for peanuts is inelastic. C.the demand curve for peanuts has shifted to the right. D.no inference can be made as to the elasticity of demand forpeanuts. Suppose that the price of peanuts falls from $3 to $2 prebushel and that, as a result, the total revenue received by peanutfarmers changes from $16 to $14 billion. Thus: A.the demand for peanuts is elastic. B.the demand for peanuts is inelastic. C.the demand curve for peanuts has shifted to the right. D.no inference can be made as to the elasticity of demand forpeanuts.

Explanation / Answer

B. the demand for peanuts is inelastic. Explanation Both price decrease and total revenue decrease - inelasticity (elasticity coefficient less than 1 here).

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