The price of wheat has fallen since 1960.Which of the following explains this price decline?
A)The price elasticity of demand is less than 1 (in absolute value)and the income elasticity of demand for wheat is low.
B)The price elasticity of demand is greater than 1 (in absolute value)and the income elasticity of demand for wheat is low.
C)The price elasticity of demand is less than 1 (in absolute value)and wheat is an inferior good.
D)The price elasticity of demand is greater than 1 (in absolute value)and the income elasticity of demand for wheat is greater than 1.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is less than 1, demand is inelastic, meaning that a decrease in price leads to a smaller percentage increase in quantity demanded. If the income elasticity of demand is low, it means that changes in income have little effect on the demand for wheat, contributing to a decline in price as supply may have increased more than demand.

The Price of Wheat Has Fallen Since 1960