Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus,
A)the demand for peanuts is elastic.
B)the demand for peanuts is inelastic.
C)the demand curve for peanuts has shifted to the left.
D)no inference can be made as to the elasticity of demand for peanuts.

Question

Quizplus · Accepted Answer

The demand for peanuts is inelastic because a decrease in price led to a decrease in total revenue, indicating that the percentage decrease in price resulted in a smaller percentage increase in quantity demanded.

Suppose That the Price of Peanuts Falls from $3 to $2