12. 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. 20 Supply Demand 16 12 Supply Demand 2 8 10 QUANTITY (Millions of bushels) One of the growers is excited by the price increase caused by the blight because she 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 $10 and $12 per bushel isv , which means demand is v between these two points. Therefore, you would tell the grower that her claim is because total revenue will as a result of the blight. 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 Total Revenue (Millions of Dollars) PRICE (Dollars per bushel)
12. 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. 20 Supply Demand 16 12 Supply Demand 2 8 10 QUANTITY (Millions of bushels) One of the growers is excited by the price increase caused by the blight because she 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 $10 and $12 per bushel isv , which means demand is v between these two points. Therefore, you would tell the grower that her claim is because total revenue will as a result of the blight. 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 Total Revenue (Millions of Dollars) PRICE (Dollars per bushel)
Essentials of Economics (MindTap Course List)
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ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter4: The Market Forces Of Supply And Demand
Section: Chapter Questions
Problem 11PA
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I mostly need help with the total revenue calcualtions at the bottom of the screenshot. If you could also briefly go over the fill in the blank questions too that would be great. I want to understand how those answers are used in the calculation of the total revenue values. Thanks!
![12. 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.
20
Supply
Demand
16
O
12
Supply
Demand
8
10
QUANTITY (Millions of bushels)
One of the growers is excited by the price increase caused by the blight because she 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 $10 and $12 per bushel is
which means demand is
between these two points. Therefore, you would tell the grower that her claim is
, because total revenue will
as a result of the blight.
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
Total Revenue (Millions of Dollars)
PRICE (Dollars per bushel)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F724eb754-2b50-41ef-baeb-d9687acf2531%2Fe97719c9-2b5f-4314-a6e7-e206425e77f9%2Frqsaa7_processed.png&w=3840&q=75)
Transcribed Image Text:12. 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.
20
Supply
Demand
16
O
12
Supply
Demand
8
10
QUANTITY (Millions of bushels)
One of the growers is excited by the price increase caused by the blight because she 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 $10 and $12 per bushel is
which means demand is
between these two points. Therefore, you would tell the grower that her claim is
, because total revenue will
as a result of the blight.
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
Total Revenue (Millions of Dollars)
PRICE (Dollars per bushel)
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Price elasticity of demand: - Price elasticity of demand measures the responsiveness of change in demand due to change in its price.
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