During 2005-2006 Europe Imported More Than $70 Million Worth of US

question 116

Multiple Choice

During 2005-2006 Europe imported more than $70 million worth of US long-grain rice. In 2006,the European Union threatened to restrict imports of long-grain rice because traces of genetically modified rice were found mixed in to commercial supplies. What would NOT be an effect in the European rice market if U.S.imports were banned?

• A) There would be a increase in long-grain rice consumption.
• B) There would be an increase in European rice production.
• C) The price of long-grain rice would increase.
• D) The quantity of long-grain rice imports would decrease.

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Definitions:

Midpoint Formula

A method used in economics and statistics to calculate the elasticity of a variable, or the percentage change in one variable in response to a percentage change in another.

Price Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in its price, indicating sensitivity to price changes.

Quantity Demanded

The entire quantity of a product or service that buyers are prepared and have the capacity to buy at a given price point.

Midpoint Method

A formula used to calculate elasticity between two points on a demand curve, focusing on the average values to minimize bias.