Answer to Question #108506 in Microeconomics for ebaad salman

Question #108506
A storm destroys half the wheat crop. Is this event more likely to hurt wheat farmers if the demand for wheat is very elastic or very inelastic? Explain.
1
Expert's answer
2020-04-08T09:58:24-0400

When storm destroys wheat crop, wheat farmers will be harmed more if the demand for wheat is elastic. If the demand for a good is elastic it means that the amount demanded is highly affected by price. Therefore when a storm damages the wheat crop and lowers the amount supplied, the resulting change in price will lower demand by a disproportionately large amount.


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