when heavy rain ruined the banana crop in central america theprice of bananas ro

Question

when heavy rain ruined the banana crop in central america theprice of bananas rose from $1 pound to $2 pound . Banana sellerssold fewer bananas but their total revenue remained unchanged a) by how much did the quantity demanded of bananaschange b) Is teh demand for bananas from central america elastic orinelastic when heavy rain ruined the banana crop in central america theprice of bananas rose from $1 pound to $2 pound . Banana sellerssold fewer bananas but their total revenue remained unchanged a) by how much did the quantity demanded of bananaschange b) Is teh demand for bananas from central america elastic orinelastic

Explanation / Answer

A) Total Revenue = $1 * x where x is the original number of poundssold Total Revenue' = $2 * y where y is the new number of poundssold Equating the two, we get x = 2y or y = x/2. The quantity was halved. B) Elasticity = % change in supply / % change in price = 50% / 100% =.5 The good has an elasticity of .5. Therefore, it isINELASTIC.

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