4. Application: Demand elasticity and agriculture Consider the market for com. The following graph shows the weekly demand for com and the weekly supply of corn. Suppose a blight occurs that destroys a significant portion of corn crops. Show the effect this shock has on the market for corn 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. Supply Demand Supply Demand QUANTITY (Millions of bushels) 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 com between the prices of $15 and $18 per bushel is , which means demand is between these two points. Therefore, you would tell the grower that his claim is as a result of the blight. , because total revenue will Confirm your previous conclusion by calculating total revenue in the corn 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)
4. Application: Demand elasticity and agriculture Consider the market for com. The following graph shows the weekly demand for com and the weekly supply of corn. Suppose a blight occurs that destroys a significant portion of corn crops. Show the effect this shock has on the market for corn 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. Supply Demand Supply Demand QUANTITY (Millions of bushels) 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 com between the prices of $15 and $18 per bushel is , which means demand is between these two points. Therefore, you would tell the grower that his claim is as a result of the blight. , because total revenue will Confirm your previous conclusion by calculating total revenue in the corn 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)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. Application: Demand elasticity and agriculture
Consider the market for corn. The following graph shows the weekly demand for com and the weekly supply of corn. Suppose a blight occurs that
destroys a significant portion of corn crops.
Show the effect this shock has on the market for corn by shifting the demand curve, supply cunve, 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.
Supply
Demand
Supply
Demand
18
24
30
QUANTITY (Millions of bushels)
One of the growers is excited by the price increase caused by the blight because he believes it will inrease 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 com between the prices of $15 and $18 per bushel is v , which means demand is
, because total revenue will
v between these two points. Therefore, you would tell the grower that his claim is_
as a result of the blight.
Confirm your previous conclusion by calculating total revenue in the con 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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