The Following Question Are Based on the Following Demand Schedule

question 67

Multiple Choice

The following question are based on the following demand schedule for wheat:

-What is the arc price elasticity of demand for wheat when the price of a bushel is between $3.30 and $3.60?

• A) 0.33
• B) 0.45
• C) 0.79
• D) 2.22
• E) 3.00

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Definitions:

Modified Duration

A measure of the sensitivity of the price of a bond or a bond portfolio to a change in interest rates, adjusted for the possibility that the bond may be called before maturity.

Basis Point

A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equivalent to 0.01%.

Interest Rates

The fee, shown as a percentage of the principal amount, that a lender imposes on a borrower for the use of assets.

T-bill Rate

The yield on U.S. Treasury bills, a benchmark for short-term interest rates in the United States.