The Price Elasticity of Demand for a Certain Agricultural Product

question 20

Multiple Choice

The price elasticity of demand for a certain agricultural product is constant (over the relevant range of prices) and equal to -1.50.The supply elasticity for this product is constant and equal to 4.Originally the equilibrium price of this good was $15 per unit.Then it was discovered that consumption of this product was unhealthy.The quantity that would be demanded at any price fell by 11%.The percent change in the long-run equilibrium consumption of this good was

• A)-11%.
• B)-8%.
• C)-2%.
• D)-12%.
• E)There is not enough information to determine the answer.

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Definitions:

Total Utility

The overall satisfaction or utility a consumer derives from consuming a certain quantity of goods or services.

Philosopher-Economist

An individual who contributes to the fields of philosophy and economics, often analyzing the ethical implications of economic theories or decisions.

Jeremy Bentham

A British philosopher, jurist, and social reformer in the 18th century, known as the founder of modern utilitarianism.

Marginal Utility

The further happiness or usefulness a person gets from consuming an additional unit of a product or service.