Problem
Suppose that the demand for wheat (measured in bushels) is given by:
Qw = 90 - 8Pw
where Qw is the number of bushels demanded in millions and Pw is the price per bushel.
A. This year's harvest is 8 million bushels. Calculate the equilibrium quantity. This question requires you to show your work and produce a mathematical answer.
B. This year's harvest is 8 million bushels. Calculate the price elasticity of demand at that point. This question requires you to show your work and produce a mathematical answer.
C. Draw the demand curve and identify the equilibrium price and quantity (note that the quantity is 8 million bushels.
D. Draw the Total Revenue Curve and identify the TR and Q on that drawing.
E. If next year's harvest were to fall below 8 million bushels, would the revenues received by wheat farmers increase or decrease? This question can be answered in a short sentence.