your job is to predict the total revenue generated by the nations corn crop. Las
ID: 2696340 • Letter: Y
Question
your job is to predict the total revenue generated by the nations corn crop. Last year's crop was 100 million bushels and the price was $5 per bushel. This year's weather was favorable throughout the country, and this year's crop will be 110 million bushels, or 10 percent larger than last year's crop. the price elasticity of demand is -0.5. predict the effect of the bumper crop on the price of corn. Assume that the entire crop is sold this year, meaning that the price of supply is zero. Illustrate with complete graph.
Explanation / Answer
your job is to predict the total revenue generated by the nations corn crop. Last year's crop was 100 million bushels and the price was $5 per bushel. This year's weather was favorable throughout the country, and this year's crop will be 110 million bushels, or 10 percent larger than last year's crop. the price elasticity of demand is -0.5. predict the effect of the bumper crop on the price of corn. Assume that the entire crop is sold this year, meaning that the price of supply is zero. Illustrate with complete graph. Here, change in quantity is 10%. Elasticity of demand is -0.5. We know elasticity= %change in quantity / % change in price. So, % change in price= 10/0.5= 20% So if price were $5 last year, they will be $(5-1)= $4
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