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:

Operating Activities

Business activities related to the day-to-day functions of producing goods, providing services, and selling products.

Paying Taxes

The mandatory financial charge or other levy imposed on an individual or a legal entity by a governmental organization in order to fund government spending and various public expenses.

Cash Outflow

The movement of money out of a business, resulting from expenses or investments.

Accounts Receivable

Outstanding amounts due from clients to a company for products sold or services utilized, awaiting payment.