The Price Elasticity of Demand for Cabbage Has Been Estimated

question 38

Multiple Choice

The price elasticity of demand for cabbage has been estimated to be -0.25.If an insect infestation destroys 20 percent of the nation's cabbage crop, how will that affect total expenditures on cabbage, all other things unchanged?

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

---

Definitions:

Payable

Refers to an amount of money that is owed and should be paid.

Bankruptcy

A legal process by which individuals or entities who cannot repay debts to creditors may seek relief from some or all of their debts.

Discharge

The termination of an obligation, such as a contractual duty or a financial debt, usually upon the completion of the terms agreed upon.

Preprinted Promissory Note

A written, standardized promise to pay a specified amount of money on demand or at a defined time, with predefined terms.