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14. Application: Demand elasticity and agriculture Consider the market for apples. The following graph shows the weekly demand for apples and the weekly supply of apples. Suppose a blight occurs that destroys a significant portion of apple crops. Show the effect this shock has on the market for apples by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per bushel) 30 24 18 0 0 6 I I 12 18 QUANTITY (Millions of bushels) D2 24 Supply Total Revenue (Millions of Dollars) 30 Demand -- Supply (?) One of the growers is excited by the price increase caused by the blight because he believes it will increase revenue in this market. As an economics student, you can use elasticities to determine whether this change in price will lead to an increase or decrease in total revenue in this market. Using the midpoint method, the price elasticity of demand for apples between the prices of $15 and $21 per bushel is 0.75, which means demand is between these two points. Therefore, you would tell the grower that his claim is , because total revenue ▼as a result of the blight. " will Confirm your previous conclusion by calculating total revenue in the apple market before and after the blight. Enter these values in the following table. Before Blight After Blight

14. Application: Demand elasticity and agriculture Consider the market for apples. The following graph shows the weekly demand for apples and the weekly supply of apples. Suppose a blight occurs that destroys a significant portion of apple crops. Show the effect this shock has on the market for apples by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per bushel) 30 24 18 0 0 6 I I 12 18 QUANTITY (Millions of bushels) D2 24 Supply Total Revenue (Millions of Dollars) 30 Demand -- Supply (?) One of the growers is excited by the price increase caused by the blight because he believes it will increase revenue in this market. As an economics student, you can use elasticities to determine whether this change in price will lead to an increase or decrease in total revenue in this market. Using the midpoint method, the price elasticity of demand for apples between the prices of $15 and $21 per bushel is 0.75, which means demand is between these two points. Therefore, you would tell the grower that his claim is , because total revenue ▼as a result of the blight. " will Confirm your previous conclusion by calculating total revenue in the apple market before and after the blight. Enter these values in the following table. Before Blight After Blight

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 10PA
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14. Application: Demand elasticity and agriculture Consider the market for apples. The following graph shows the weekly demand for apples and the weekly supply of apples. Suppose a blight occurs that destroys a significant portion of apple crops. Show the effect this shock has on the market for apples by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per bushel) 30 24 18 0 0 6 I I 12 18 QUANTITY (Millions of bushels) D2 24 Supply Total Revenue (Millions of Dollars) 30 Demand -- Supply (?) One of the growers is excited by the price increase caused by the blight because he believes it will increase revenue in this market. As an economics student, you can use elasticities to determine whether this change in price will lead to an increase or decrease in total revenue in this market. Using the midpoint method, the price elasticity of demand for apples between the prices of $15 and $21 per bushel is 0.75, which means demand is between these two points. Therefore, you would tell the grower that his claim is , because total revenue ▼as a result of the blight. " will Confirm your previous conclusion by calculating total revenue in the apple market before and after the blight. Enter these values in the following table. Before Blight After Blight
Transcribed Image Text:14. Application: Demand elasticity and agriculture Consider the market for apples. The following graph shows the weekly demand for apples and the weekly supply of apples. Suppose a blight occurs that destroys a significant portion of apple crops. Show the effect this shock has on the market for apples by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per bushel) 30 24 18 0 0 6 I I 12 18 QUANTITY (Millions of bushels) D2 24 Supply Total Revenue (Millions of Dollars) 30 Demand -- Supply (?) One of the growers is excited by the price increase caused by the blight because he believes it will increase revenue in this market. As an economics student, you can use elasticities to determine whether this change in price will lead to an increase or decrease in total revenue in this market. Using the midpoint method, the price elasticity of demand for apples between the prices of $15 and $21 per bushel is 0.75, which means demand is between these two points. Therefore, you would tell the grower that his claim is , because total revenue ▼as a result of the blight. " will Confirm your previous conclusion by calculating total revenue in the apple market before and after the blight. Enter these values in the following table. Before Blight After Blight
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