Suppose That the Price of Peanuts Falls from $3 to $2

question 19

Multiple Choice

Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus,

• A)the demand for peanuts is elastic.
• B)the demand for peanuts is inelastic.
• C)the demand curve for peanuts has shifted to the left.
• D)no inference can be made as to the elasticity of demand for peanuts.

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Definitions:

Scarce Good

A product or resource that is limited in availability compared to the desired demand, leading to competition for its acquisition.

Freshwater

Water with low concentrations of dissolved salts, essential for drinking, agriculture, and many industrial processes.

Human Capital

The combined abilities, expertise, and past experiences held by either a person or a group, considered in relation to their worth or expense to a business or nation.

Economics

The social science that studies how individuals, businesses, governments, and nations make choices on allocating scarce resources to satisfy their unlimited wants.