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The short-run supply of a certain crop is perfectly inelastic, because it has already been harvested and no more of it can be grown until the next growing season. In order to raise the price received by farmers, the government orders the destruction of a percentage of the harvest. Does this action result in a deadweight loss? Why or why not? Assume that the cost of distributing the crop to consumers is zero.
Index number formulas
Suppose that quantity demand falls by 30% as a result of a 5% increase in price. What would be the price elasticity of demand for this good?
Use the information below to calculate the numbers instead of "?" marks in the Table. Show and explain all your calculations?
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