If a severe drought causes the harvest of corn to be 10 percent less than anticipated, it will cause a large increase in the price of corn if
A) corn is scarce.
B) the demand for corn is highly elastic.
C) the demand for corn is highly inelastic.
D) the supply of corn is highly elastic.
E) the supply of corn is highly inelastic.
C
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In the mythical nation of Oz, gasoline used to sell for $1 a gallon, and the natives purchased 100,000 gallons a week. Four years ago, the price rose to $3 a gallon, and the natives reduced their quantity demanded to 90,000 gallons a week. Calculate the
price elasticity for this change. Today, gas again sells for $1 a gallon in Oz, but the natives are only buying 70,000 gallons a week. What gives?
If all of the following examples are elastic, which one will most likely have an increase of revenue?
a. The price of shower curtains rises. b. The price of cell phones falls. c. The price of raspberries remains constant. d. The quantity supplied of skin moisturizer remains constant.