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 6 0 0 12 24 36 Supply Demand QUANTITY (Thousands of tons) 48 Total Revenue (Thousands of Dollars) 60 Demand - Supply A number of the growers are concerned about the price decrease initiated by the stretch of favorable weather conditions, as they believe it will lead to decreased 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 $12 per ton is between these two points, demand is Thus, you can conclude that the grower's claim is will due to the favorable weather conditions. , meaning that because total revenue Confirm your previous conclusion by calculating total revenue in the cashew market before and after the favorable weather conditions. Enter these values in the following table. Before Favorable Weather Conditions After Favorable Weather Conditions
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 6 0 0 12 24 36 Supply Demand QUANTITY (Thousands of tons) 48 Total Revenue (Thousands of Dollars) 60 Demand - Supply A number of the growers are concerned about the price decrease initiated by the stretch of favorable weather conditions, as they believe it will lead to decreased 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 $12 per ton is between these two points, demand is Thus, you can conclude that the grower's claim is will due to the favorable weather conditions. , meaning that because total revenue Confirm your previous conclusion by calculating total revenue in the cashew market before and after the favorable weather conditions. Enter these values in the following table. Before Favorable Weather Conditions After Favorable Weather Conditions
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![### Understanding the Market Impact of Favorable Weather Conditions on Cashew Prices
**Objective:**
Analyze the effects of favorable weather conditions on the cashew market by shifting either the demand curve, supply curve, or both.
#### Interactive Graph Instructions:
You are provided with an interactive supply and demand graph. You can shift the demand or supply curves to see the effects on market equilibrium.
**Steps:**
1. **Select and Drag Curves:**
- Click on either the demand or supply curve.
- Drag the curve to a new position and release. Curves will snap into place. If they return to their original position, drag them slightly farther.
**Diagram Explanation:**
- **Axes:**
- Horizontal axis (X-axis) represents Quantity in thousands of tons.
- Vertical axis (Y-axis) represents Price in dollars per ton.
- **Supply Curve (Orange):** Shows the relationship between the price and quantity of cashews that producers will supply.
- **Demand Curve (Blue):** Shows the relationship between the price and quantity of cashews that consumers will buy.
- **Equilibrium Point:** The intersection of the supply and demand curves, indicating the market price and quantity without any shocks.
#### Economic Analysis:
**Concern of Growers:**
Growers are worried that the price decrease due to favorable weather conditions will lower their revenues. To confirm this, we will examine price elasticity.
**Elasticity Calculation:**
Using the midpoint method:
- **Price Elasticity of Demand** for cashews when price changes from $15 to $12 per ton.
- Calculate **Total Revenue** to verify the growers’ concerns.
**Elasticity Formula:**
\[ \text{Elasticity} = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}} \]
1. **Determine Elasticity:**
- Given the price levels ($15 and $12 per ton), find the % change in price and the corresponding % change in demand.
- Use the values to compute elasticity.
2. **Conclusion:**
- Whether demand is elastic or inelastic will help in understanding the growers' concern.
- If inelastic, total revenue increases when prices fall. If elastic, total revenue decreases with price fall.
#### Total Revenue Comparison:
- **Before Favorable Weather Conditions:** Calculate total revenue.
- **After Favorable Weather Conditions:** Calculate total revenue after weather impacts.
-](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b13a588-62b7-4d8d-b822-191baf15bc8b%2F433d1001-af8a-455b-b5fa-e9deb00492d0%2Fc0hygwq_processed.png&w=3840&q=75)
Transcribed Image Text:### Understanding the Market Impact of Favorable Weather Conditions on Cashew Prices
**Objective:**
Analyze the effects of favorable weather conditions on the cashew market by shifting either the demand curve, supply curve, or both.
#### Interactive Graph Instructions:
You are provided with an interactive supply and demand graph. You can shift the demand or supply curves to see the effects on market equilibrium.
**Steps:**
1. **Select and Drag Curves:**
- Click on either the demand or supply curve.
- Drag the curve to a new position and release. Curves will snap into place. If they return to their original position, drag them slightly farther.
**Diagram Explanation:**
- **Axes:**
- Horizontal axis (X-axis) represents Quantity in thousands of tons.
- Vertical axis (Y-axis) represents Price in dollars per ton.
- **Supply Curve (Orange):** Shows the relationship between the price and quantity of cashews that producers will supply.
- **Demand Curve (Blue):** Shows the relationship between the price and quantity of cashews that consumers will buy.
- **Equilibrium Point:** The intersection of the supply and demand curves, indicating the market price and quantity without any shocks.
#### Economic Analysis:
**Concern of Growers:**
Growers are worried that the price decrease due to favorable weather conditions will lower their revenues. To confirm this, we will examine price elasticity.
**Elasticity Calculation:**
Using the midpoint method:
- **Price Elasticity of Demand** for cashews when price changes from $15 to $12 per ton.
- Calculate **Total Revenue** to verify the growers’ concerns.
**Elasticity Formula:**
\[ \text{Elasticity} = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}} \]
1. **Determine Elasticity:**
- Given the price levels ($15 and $12 per ton), find the % change in price and the corresponding % change in demand.
- Use the values to compute elasticity.
2. **Conclusion:**
- Whether demand is elastic or inelastic will help in understanding the growers' concern.
- If inelastic, total revenue increases when prices fall. If elastic, total revenue decreases with price fall.
#### Total Revenue Comparison:
- **Before Favorable Weather Conditions:** Calculate total revenue.
- **After Favorable Weather Conditions:** Calculate total revenue after weather impacts.
-
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