The Price Elasticity of Demand for Peanuts Has Been Estimated

question 48

Multiple Choice

The price elasticity of demand for peanuts has been estimated to be -0.38.If an insect infestation destroys 20 percent of the nation's peanut crop, how will that affect total expenditures on peanuts, all other things unchanged?

• A) total expenditures will remain unchanged
• B) total expenditures will fall
• C) total expenditures will rise
• D) not enough information is given to answer the question

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Definitions:

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Individuals of Jewish heritage who were involved in various forms of trade and commerce historically.

Lucrative Crop

A crop that generates a substantial profit for the farmer or the economy, often due to high demand and/or premium pricing.

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A conflict from 1754 to 1763 in North America, part of a global struggle between Britain and France, also known as the Seven Years' War.

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Levies imposed by local governments based on the assessed value of real estate property owned, commonly used to fund public services such as education and infrastructure.