The Price Elasticity of Demand for Cabbage Has Been Estimated

question 38

Multiple Choice

The price elasticity of demand for cabbage has been estimated to be -0.25.If an insect infestation destroys 20 percent of the nation's cabbage crop, how will that affect total expenditures on cabbage, all other things unchanged?

• A) total expenditures will rise
• B) total expenditures will fall
• C) total expenditures will remain unchanged
• D) not enough information is given to answer the question

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Definitions:

Rural Republic

A conceptual political entity centered around agrarian values, often idealizing the virtues of rural life and self-sufficiency.

Economic Equality

The principle or condition of having equal access to financial resources and opportunities, aiming to reduce disparities in wealth and income among different population groups.

Urban Democracy

The application of democratic governance in urban areas, emphasizing participation of city dwellers in decision-making processes.

Economic Proposal

A formal suggestion aimed at solving an economic issue or improving economic conditions through specific strategies or plans.