Answer to Question #115466 in Economics for Krisha

Question

1. The price elasticity of demand for tomatoes is −1. This month the price is Php 50 per kilo and the total amount of tomatoes demanded is 1000 truckloads. Next month the price is expected to rise to 80 per kilo. How many truckloads can we expect to be demanded next month.

Answer 1

If the price elasticity of demand for tomatoes is −1, then we expect the number of truckloads demanded next month to be:

$Qd = 1×\frac{1000} {80/50} = 625.$