In the year 107 WBCE (Way before the Common Era) the Gondwanaland Chairman of Production reported that the gosum berry growers were able to meet an average demand of 700 barrels of gosum berries per month at an average a price of $70 per barrel.
In the year 108 WBCE the growers were plagued with a gosum berry bug infestation that reduced average output, causing production to fall to only 600 barrels per month, causing the price to rise to $84 per barrel. The following table shows the Chairman's report:

a. Using the midpoint method, calculate the price elasticity of demand for Gondwanaland gosum berries. Explain what this price elasticity of demand means?
b. What is the monthly average total revenue for year 107, and the monthly average total revenue for year 108? How do these numbers compare to each other?

c. Using your answer to part a. above, how could you have predicted this change in total monthly revenue?

Transcribed Image Text:

Monthly barrels of berries demanded gosum Price per barrel Year (WBCE) 107 $70 700 108 $84 600 Monthly barrels of gosum berries demanded Monthly average total revenue Price per barrel Year (WBCE) 107 700 $70 108 600 $84 Change in average total monthly revenue