Question

One of the growers is excited by this advancement because now he can sell more crops, which he 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 soybeans between the prices of $15 and $9 per bushel is , which means demand is between these two points. Therefore, you would tell the grower that his claim is , because total revenue will as a result of the technological advancement.

Answer 1

0.67

inelastic

incorrect

Step-by-step explanation:

Midpoint method is used by economists to identify the price elasticity. In this method the percentage change in quantity demanded is divided by percentage change in price. In the given scenario the price elasticity of bushel is 0.67 which determines that the change in quantity demanded will be due to change in price. The demand is inelastic therefore the claim of farmers is incorrect.