Essay
Calculate the arc price elasticity of demand for wheat in the two situations below:
The Wheat Market Farmer Brown's Wheat
Old price; $3.40/bu Old price; $3.40/bu
Old quantity; 2.5 billion bu Old quantity; 28,000 bu
New price; $3.20/bu New price; $3.20/bu
New quantity; 2.525 billion bu New quantity; 35,000 bu
Can you account for the difference in elasticities?
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