Suppose that corn currently costs $4 per bushel and that wheat currently costs $3 per bushel. Also assume that the
a. If the price of corn fell by 25 percent to $3 per bushel, by what percentage would the quantity
b. To what value would the price of wheat have to fall to induce consumers to increase their purchases of wheat by 5 percent?
c. If the government imposes a $0.40 per bushel tax on corn so that the price of corn rises by 10 percent to $4.40 per bushel, by what percentage would the quantity demanded of corn decrease? If the initial quantity demanded is 10 billion bushels per year, by how many bushels would the quantity demanded decrease in response to this tax?
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- Suppose that the price elasticity of demand for world famous Bi told that following a price increase, the quantity demanded fell b brought about this change in quantity demanded? O a. 40 percent O b. 25 percent O c. 2.5 percent O d. 0.4 percentarrow_forwardSuppose that both wheat and corn have an income elasticity of 0.1 a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity demanded of wheat increase each year, holding all other factors constant? Holding all other factors constant, if 10 billion bushels are demanded this year, by how many bushels will the quantity demanded increase next year if incomes rise by 2 percent? b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?arrow_forwardSuppose demand and supply are given by: (LO3, LO4) Qx d = 14 − 1/2 Px and Qx s = 1/4Px − 1 a. Determine the equilibrium price and quantity. Show the equilibrium graphically. B. Supposed a $ 12 excise tax is imposed on the good. Determine the new equilibrium price and quantity C. How much tax revenue does the government earn with the $12 taxarrow_forward
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