Answer:<u> -0.9 ; inelastic</u>
Explanation:
Given:
The average price of wheat per metric ton in 2012 = $305.75
Demand (in millions of metric tons) in 2012 = 672
The average price of wheat per metric ton in 2013 = $291.56
Demand (in millions of metric tons) in 2013 = 700
We will compute the elasticity using the following formula:
ε =
ε =
Now , we'll first compute
i.e. =
= 0.04081
Similarly for
i.e. =
= -0.0475
ε =
ε = -0.859 -0.9
we know that ;
If, ε > 1 ⇒ Elastic
ε < 1 ⇒ Inelastic
ε = 1 ⇒ unit elastic
<u><em> Here , ε = -0.859
-0.9 </em></u>
<u><em>Therefore ε is inelastic.</em></u>
