The following graph illustrates the market for cashews. It plots the monthly supply of cashews and the monthly demand for cashews. Suppose an increase in pests destroys a major portion of cashew trees. Show the effect this shock has on the market for cashews 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. 30 PRICE (Dollars per ton) X Demand 24 N 0 4 8 12 Supply QUANTITY (Thousands of tons) 16 20 Total Revenue (Thousands of Dollars) Demand Supply ? One of the growers is pleased with the price increase caused by the pests because she believes it will lead to increased revenue. Using elasticities, you will be able to determine whether this price change will lead to a rise or fall in total revenue in this market. Using the midpoint method, the price elasticity of demand for cashews between the price levels of $15 and $18 per ton is, meaning that between these two points, demand is Thus, you can conclude that the grower's claim is , because total revenue will due to the pestilence. Confirm your previous conclusion by calculating total revenue in the cashew market before and after the pestilence. Enter these values in the following table. Before Pestilence After Pestilence
The following graph illustrates the market for cashews. It plots the monthly supply of cashews and the monthly demand for cashews. Suppose an increase in pests destroys a major portion of cashew trees. Show the effect this shock has on the market for cashews 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. 30 PRICE (Dollars per ton) X Demand 24 N 0 4 8 12 Supply QUANTITY (Thousands of tons) 16 20 Total Revenue (Thousands of Dollars) Demand Supply ? One of the growers is pleased with the price increase caused by the pests because she believes it will lead to increased revenue. Using elasticities, you will be able to determine whether this price change will lead to a rise or fall in total revenue in this market. Using the midpoint method, the price elasticity of demand for cashews between the price levels of $15 and $18 per ton is, meaning that between these two points, demand is Thus, you can conclude that the grower's claim is , because total revenue will due to the pestilence. Confirm your previous conclusion by calculating total revenue in the cashew market before and after the pestilence. Enter these values in the following table. Before Pestilence After Pestilence
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following graph illustrates the market for cashews. It plots the monthly supply of cashews and the monthly demand for cashews. Suppose an
increase in pests destroys a major portion of cashew trees.
Show the effect this shock has on the market for cashews 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 ton)
30
24
18
12
6
0
0
4
8
12
Supply
Demand
QUANTITY (Thousands of tons)
16
Total Revenue (Thousands of Dollars)
20
Demand
Supply
?
One of the growers is pleased with the price increase caused by the pests because she believes it will lead to increased revenue. Using elasticities, you
will be able to determine whether this price change will lead to a rise or fall in total revenue in this market.
Using the midpoint method, the price elasticity of demand for cashews between the price levels of $15 and $18 per ton is
between these two points, demand is
▼. Thus, you can conclude that the grower's claim is
due to the pestilence.
Confirm your previous conclusion by calculating total revenue in the cashew market before and after the pestilence. Enter these values in the following
table.
meaning that
, because total revenue will
I
Before Pestilence After Pestilence
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