3 Read the following information and then answer the truefal

3. Read the following information and then answer the true/false questions.

                                                Maple Syrup prices soared for a second year. A combination of warm weather and maple-tree die-off from acid rain again reduced the syrup supply. One farm’s output fell to only 1,200 gallons this year, compared with a normal 4,200. Another’s fell only 30% to 5,000 gallons.

                                                A gallon of syrup sells for $35 at one outlet in Massachusetts, up from $25 a year ago. Some producers charge more. One concern is that the higher prices will scare off food processors and consumers. But one producer noted that \"It\'s a unique product and demand remains firm.\"

TRUE OR FALSE?

            3i.        As a result of the decrease in supply of maple syrup, demand is expected to decrease also.

3ii.       Assuming price increased from $25 to $35, if quantity purchased fell by 11 percent, then the price elasticity of demand is .33 (using midpoint formula).

Solution

3.True

3(i) False

3(ii) False (ED = 0.275)