Question: Chapter 6 - Problem 2 (a,b,c) In the United States, 2018 was a bad year for growing wheat. And as wheat supply decreased, the price

Chapter 6 - Problem 2 (a,b,c)

  1. In the United States, 2018 was a bad year for growing wheat. And as wheat supply decreased, the price of wheat rose dramatically, leading to a lower quantity demanded (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity of wheat demanded.
2017 2018

Quantity demanded (bushels)

 2.3 billion 1.7 billion

Average price (per bushel)

 $4.02 $4.98
  1. Using the midpoint method, calculate the price elasticity of demand for winter wheat.
  2. What is the total revenue for U.S. wheat farmers in 2017 and 2018?
  3. Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers? How could you have predicted this from your answer to part a?

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