Explanation From the given data, the price has changed from $3.42 to $4.26 in one year. Thus, the average price is Therefore, the percentage change in the price as per mid-point method is Similarly, the quantity demanded changed from 2.2 billion to 2 billion in one year. The average quantity is billion Therefore, the percentage change in the quantity demanded as per the mid-point method is (0.2)/ 2.1 = 0.095 Thus, the elasticity of price of wheat is

The price elasticity of demand of wheat using the midpoint method. Total revenue for farmers in 2014 and 2015. Whether the bad harvest increased or decreased the total revenue of wheat farmers. How can that be predicted from the Explanation to part a? Concept Introduction: Price Elasticity of Demand: Price elasticity of demand refers to the percentage change in the quantity demanded in response to percentage change in the price. Mid-Point Method of Calculation: Usually percentage change in a variable X is calculated by (New value of X − Old value of X)/ Old value of X. In mid-point method, the percentage change is calculated as (New value of X − Old value of X) / Average value of X.

MICROECONOMICS

5th Edition

ISBN: 9781319395018

Author: KRUGMAN

Publisher: MAC HIGHER

See similar textbooks

Concept explainers

Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.

Question

Chapter 6, Problem 2P

To determine

The price elasticity of demand of wheat using the midpoint method.

Total revenue for farmers in 2014 and 2015.

Whether the bad harvest increased or decreased the total revenue of wheat farmers. How can that be predicted from the Explanation to part a?

Concept Introduction:

Price Elasticity of Demand:

Price elasticity of demand refers to the percentage change in the quantity demanded in response to percentage change in the price.

Mid-Point Method of Calculation:

Usually percentage change in a variable X is calculated by (New value of X − Old value of X)/ Old value of X. In mid-point method, the percentage change is calculated as (New value of X − Old value of X) / Average value of X.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Chapter 6, Problem 1P

Chapter 6, Problem 3P

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education