L
lilsweetsouthernpeach
Guest
I dont understand this at all!!!
1. Assume that the price per bushel of No. 2 soft red wheat is $10.50 per bushel and at this
price the rate of demand is 4.50 million bushels per year. Now assume that if the price per
bushel drops to $10.45 the quantity demanded increases to 4.51 million bushels per year.
Using the arc equation, calculate and interpret the own‐price elasticity of demand for No. 2
soft red wheat.
2. Assume that the retail price of pork in Bowling Green declines from $3.99/pound to
$3.49/pound. Associated with this price decrease the weekly consumer demand for retail
beef in Bowling Green decreases from 90,000 pounds to 88,000 pounds. Calculate and
interpret the cross‐price elasticity of demand between beef and pork.
3. Assume that the average weekly household income in Bowling
Green increases from $630
to $640. Associated with the increase in income the average consumer in Bowling Green
increases weekly expenditures on organic strawberries from $1.00 to $1.02. Calculate and
interpret the income elasticity of demand for organic strawberries.
1. Assume that the price per bushel of No. 2 soft red wheat is $10.50 per bushel and at this
price the rate of demand is 4.50 million bushels per year. Now assume that if the price per
bushel drops to $10.45 the quantity demanded increases to 4.51 million bushels per year.
Using the arc equation, calculate and interpret the own‐price elasticity of demand for No. 2
soft red wheat.
2. Assume that the retail price of pork in Bowling Green declines from $3.99/pound to
$3.49/pound. Associated with this price decrease the weekly consumer demand for retail
beef in Bowling Green decreases from 90,000 pounds to 88,000 pounds. Calculate and
interpret the cross‐price elasticity of demand between beef and pork.
3. Assume that the average weekly household income in Bowling
Green increases from $630
to $640. Associated with the increase in income the average consumer in Bowling Green
increases weekly expenditures on organic strawberries from $1.00 to $1.02. Calculate and
interpret the income elasticity of demand for organic strawberries.