Question

A drought in the highlands of Peru spoils the quinoa crop. The price rises from $4/kilo to $6/kilo, and the quantity demanded decreases from 1,000 kilos/week to 600 kilos/week. Clearly, when this happens:
i.   There is a change in price: P
ii.   There is an average price
iii.   There is a change in quantity of quinoa demanded: Q
iv.   There is an average quantity of quinoa demanded

a.   Calculate the price elasticity of demand over this price range. (8 pts)

b.   Describe what you know about the demand for quinoa (4 pts)

Answer 1