Suppose the demand for oranges in the U.S. is: P = 5.35 - .012 Q
Where Q is the quantity demanded for oranges in the U.S. (measured in millions of boxes per year) and P is the price per box.
Suppose the current price of oranges is $3 per box. A deep freeze comes through a wipes out part of the Florida orange crop, raising the price of oranges to $3.25 per box.
a) Using the midpoint formula, what is the elasticity of demand for oranges at $3 per box?
b) What happens to total revenues from oranges due to the freeze? why?