Suppose That When the Price of Wheat Is $2 Per

question 182

Multiple Choice

Suppose that when the price of wheat is $2 per bushel,farmers can sell 10 million bushels.When the price of wheat is $3 per bushel,farmers can sell 8 million bushels.Which of the following statements is true? The demand for wheat is

• A)income inelastic,so an increase in the price of wheat will increase the total revenue of wheat farmers.
• B)income elastic,so an increase in the price of wheat will increase the total revenue of wheat farmers.
• C)price inelastic,so an increase in the price of wheat will increase the total revenue of wheat farmers.
• D)price elastic,so an increase in the price of wheat will increase the total revenue of wheat farmers.

---

Definitions:

Average Variable Cost

The sum of all variable production costs divided by the number of units produced.

Profit-Maximizing

The strategy or process by which a company determines the price and output level that generates the most profit.

Mutual Interdependence

A condition in which entities are mutually reliant on each other, commonly seen in markets where actions of one firm significantly affect others.

Price-Output Policies

Strategies employed by firms or governments to regulate prices and output levels in a market, often to promote competition or control inflation.