The current price of wheat is $1.00 per bushel, and the price elasticity of demand for wheat is known to be 0.50. a bad harvest causes the supply of wheat to decrease and as a result the price of wheat rises by 20%. what will be the percentage change in quantity demanded for wheat and will farm revenues rise or fall?

demand will fall by 10%

and revenue increase by 8%

Explanation:

the price elasticity is the relationship between the quantity demanded and the change in price:

demandQ / ΔPrice = price-elasticity

demandQ / 20% = 0.5

Qd =20% x 0.5 = 10% the demand will fall by 10%

Now, we can determinate the revenue:

QXP = TR

Qx1 = 1Q

after the price increase:

(1 - 0.1)Q x 1.2 = 0.9 x 1.2Q = 1.08Q

1.08Q > 1Q the total revenue should increase.

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20

answer; descriptive statistics;