This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: If unit elastic (e=1), TR constant If elastic, e>1, P Qd If unit elastic, e=1, TR unchanged D for basic foodstuffs, inelastic S curve for food to right, again and again Inelastic D+S to right TR Revenue squeeze for farmers Political pressure for govt. subsidies Attempts to slow down tech. improvements Old TR =(90)(1.05M)=$945,000 New TR=(110)(.95 M)=$1,045,000 TR P $3/lb. to $4/lb. Qd 240,000 to 180,00 E=(Qd/Qd avg. ) / (P/P-avg.) = (6/21)/(1/3.5)=(6/21)3.5=21/21=1 unit elastic P +unit elastic, TR unchanged...
View Full Document
This note was uploaded on 04/19/2011 for the course EC 201 taught by Professor Ballard during the Fall '08 term at University of Michigan.
- Fall '08