The worst drought in over 50 years has decimated crops of soy beans and corn in the united states. (source: new york times, august 10, 2012). because the production of corn has decreased, prices are expected to increase by 25 percent. these data are insufficient for calculating the elasticity of demand because we also need to know the

Question

Business

Annabelle Potter

26 September, 20:11

The worst drought in over 50 years has decimated crops of soy beans and corn in the united states. (source: new york times, august 10, 2012). because the production of corn has decreased, prices are expected to increase by 25 percent. these data are insufficient for calculating the elasticity of demand because we also need to know the

+2

Answers (1)

Know the Answer?

Mylee Kane · Answer 1

Answer: These data are insufficient for calculating the elasticity of demand because we also need to know the percentage decrease in the production of corn.

The price elasticity of demand is defined as the percentage change in the quantity divided by the percentage change in demand.

The data gives the percentage change in demand in numbers (-25%). However, although there is a description of the effect of the drought on corn production, there is no numerical data that indicates the percentage change in the quantity. Hence this data is insufficient to calculate the elasticity of demand.