Suppose the demand for wheat increased dramatically between 1950 and 2000 but the equilibrium quantity increased only slightly. Absent any other changes, what could explain the small increase in the equilibrium quantity? The equilibrium quantity of wheat could have increased only slightly given a dramatic increase in demand because

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Business

Roy Mcdonald

29 September, 20:56

Suppose the demand for wheat increased dramatically between 1950 and 2000 but the equilibrium quantity increased only slightly. Absent any other changes, what could explain the small increase in the equilibrium quantity? The equilibrium quantity of wheat could have increased only slightly given a dramatic increase in demand because

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Cale Conley · Answer 1

Because Demand is more Inelastic.

Explanation:

Market Equilibrium is determined where Market Demand = Market Supply & upward sloping supply curve, downward sloping demand curve intersect.

If Demand is more inelastic (less respondent to price), the demand curve is steeper. This implies massive increase i. e rightwards shift in demand curve - would establish new equilibrium with equilibrium quantity increased slightly.