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:

Basic Assumption

A fundamental belief or principle that is accepted as true without proof, often serving as the basis for further reasoning or behavior.

Attribution Theory

A psychological theory that explains how individuals infer the causes of their own and others' behavior.

Dispositional Nature

Refers to inherent personality traits and tendencies that influence an individual's behavior and reactions.

Task Difficulty

The level of challenge presented by a task, which can affect an individual's performance and motivation.