The Price Elasticity of Demand for a Certain Agricultural Product

question 44

Multiple Choice

The price elasticity of demand for a certain agricultural product is constant (over the relevant range of prices) and equal to -2. The supply elasticity for this product is constant and equal to 3. Originally the equilibrium price of this good was $45 per unit. Then it was discovered that consumption of this product was unhealthy. The quantity that would be demanded at any price fell by 100%. The percent change in the long-run equilibrium consumption of this good was

• A) -100%.
• B) -64%.
• C) -20%.
• D) -60%.
• E) There is not enough information to determine the answer.

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Definitions:

TC (Total Cost) Curve

A graphical representation that shows the total cost of production at different levels of output.

Value to Consumers

The maximum amount of money a consumer is willing to pay for a good or service, reflecting the perceived benefit or utility they expect to obtain.

Marginal Cost

Refers to the additional expense associated with producing one more unit of a good or service, reiterated in a new explanation.

Marginal Revenue

Additional earnings derived from the sale of an extra unit of a product or service.