The price elasticity of demand for lettuce has been estimated to be 2.58.If an insect infestation destroys 10% of the nation's lettuce crop,how will that affect total revenue from lettuce,all other things unchanged?

A) Total revenue will remain unchanged.
B) Total revenue will fall.
C) Total revenue will rise.
D) The information is insufficient to answer the question.

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Baptiste BONNET · Accepted Answer

Final Answer : B, Explanation :  With a price elasticity of demand of 2.58, we can conclude that lettuce is relatively elastic, meaning that a change in quantity demanded is sensitive to changes in price. Therefore, if the price of lettuce were to increase due to the decrease in supply caused by the insect infestation, the total revenue from lettuce would decrease as consumers switch to substitute goods. This is because the percentage decrease in quantity demanded would be greater than the percentage increase in price, resulting in a decrease in total revenue.

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