8. Application: Demand elasticity and agriculture Consider the market for corn. The following graph shows the weekly demand for corn and the weekly supply of corn. Suppose new farming technology is developed that enables growers to produce more crops with the same resources. 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. 20 Demand 16 Supply Supply 12 8 Demand 4. 10 20 30 40 50 QUANTITY (Millions of bushels) One of the growers is excited by this advancement because now she can sell more crops, which she believes 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 corn between the prices of $10 and $6 per bushel is v 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 technological advancement. PRICE (Dollars per bushel)
8. Application: Demand elasticity and agriculture Consider the market for corn. The following graph shows the weekly demand for corn and the weekly supply of corn. Suppose new farming technology is developed that enables growers to produce more crops with the same resources. 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. 20 Demand 16 Supply Supply 12 8 Demand 4. 10 20 30 40 50 QUANTITY (Millions of bushels) One of the growers is excited by this advancement because now she can sell more crops, which she believes 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 corn between the prices of $10 and $6 per bushel is v 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 technological advancement. PRICE (Dollars per bushel)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Confirm your previous conclusion by calculating total revenue in the corn market before and after the technological advancement. Enter these values
in the following table.
Before Technological Advancement
After Technological Advancement
Total Revenue (Millions of Dollars)
Transcribed Image Text:8. Application: Demand elasticity and agriculture
Consider the market for corn. The following graph shows the weekly demand for corn and the weekly supply of corn. Suppose new farming technology
is developed that enables growers to produce more crops with the same resources.
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.
20
Demand
16
Supply
O
12
Supply
Demand
10
20
30
40
50
QUANTITY (Millions of bushels)
One of the growers is excited by this advancement because now she can sell more crops, which she believes 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 corn between the prices of $10 and $6 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 technological advancement.
PRICE (Dollars per bushel)
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