Suppose the estimated demand function for corn in the U.S. is: P = 10 - 0.3 Q
Where Q is the quantity demanded for U.S. produced corn (measured in billions of bushels per year) and P is the price per bushel.
THIS IS A MULTIPLE PART QUESTION:
a) Graph the demand curve on a standard supply and demand graph
b) What is the quantity demanded of corn at a price of $6.00 per bushel? at $4 per bushel?
c) Using the midpoint formula for the price elasticity of demand, calculate the price elasticity of demand for corn when the price of corn falls from $6.00 to $3.00 per bushel?
d) Is the demand for corn elastic or inelastic? why?
e) Based on your answer to parts c) and d), what do you expect to happen to revenues corn producers earn when the price falls from $6.00 to $3.00 per bushel? why?
f) Calculate revenues from corn purchases at $6 and $3 to demonstrate your answer to part e) is correct.