The percentage change in the quantity demanded of wheat

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Suppose the current price of wheat is $1.00 per bushel, and the price elasticity of demand for wheat is known to be 0.50. A bad harvest causes the supply of wheat to decrease, and as a result, the price of wheat rises by 20%.

a. What will be the percentage change in the quantity demanded of wheat?

b. Will quantity demanded increase or decrease?

c. In this example, is demand for wheat elastic or inelastic? How do you know?

Reference no: EM131003013

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