The Price Elasticity of Demand for Lettuce Has Been Estimated

question 129

Multiple Choice

The price elasticity of demand for lettuce has been estimated to be -2.58.If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, all other things unchanged?

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

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Definitions:

Net Income

The total earnings or profit of a company after subtracting all expenses, including taxes and operating expenses, from its total revenue.

Gross Profit

The difference between revenue and the cost of goods sold (COGS), indicating the basic profitability of a company's core operations.

Gross Profit

The difference between sales and the cost of goods sold, essentially measuring the efficiency of a company in managing its labor and supplies in production.

Intra-entity

Pertains to transactions or activities occurring within the same legal entity.