one of the growers is excited by the price increase caused by the blight because she believes it will…

one of the growers is excited by the price increase caused by the blight because she 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 apples between the prices of $15 and $18 per bushel is , which means demand is , and total revenue will as a result of the blight. confirm your previous conclusion by calculating total revenue in the apple market before and after the blight. enter the results in the following table. total revenue (millions of dollars) before blight after blight 2.44 1.22 0.82 0.61

one of the growers is excited by the price increase caused by the blight because she 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 apples between the prices of $15 and $18 per bushel is , which means demand is , and total revenue will as a result of the blight. confirm your previous conclusion by calculating total revenue in the apple market before and after the blight. enter the results in the following table. total revenue (millions of dollars) before blight after blight 2.44 1.22 0.82 0.61

Answer

Explanation:

Step1: Recall price - elasticity formula

The mid - point formula for price elasticity of demand is $E_d=\frac{%\Delta Q}{%\Delta P}=\frac{\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}}{\frac{P_2 - P_1}{(P_2 + P_1)/2}}$. However, we can also use the relationship between elasticity and total revenue. If $E_d> 1$, demand is elastic; if $E_d < 1$, demand is inelastic; if $E_d=1$, demand is unit - elastic.

Step2: Analyze the given elasticities

We are given elasticities: 2.44 (elastic), 1.22 (elastic), 0.82 (inelastic), 0.61 (inelastic). When demand is elastic ($E_d>1$), an increase in price leads to a decrease in total revenue. When demand is inelastic ($E_d < 1$), an increase in price leads to an increase in total revenue.

Step3: Calculate total revenue

Let's assume we have quantity demanded values corresponding to the two prices. But if we just use the elasticity concept. If $E_d = 0.82$ or $E_d=0.61$ (inelastic), an increase in price from $P_1 = 15$ to $P_2 = 18$ will lead to an increase in total revenue. If $E_d=2.44$ or $E_d = 1.22$ (elastic), an increase in price will lead to a decrease in total revenue.

Let's assume we have quantity values from the demand - curve graph (not fully visible in the image but conceptually). Let $Q_1$ be the quantity demanded at $P_1 = 15$ and $Q_2$ be the quantity demanded at $P_2=18$.

Total revenue before ($TR_1$) is $TR_1=P_1\times Q_1 = 15\times Q_1$. Total revenue after ($TR_2$) is $TR_2=P_2\times Q_2=18\times Q_2$.

If $E_d = 0.61$: Since demand is inelastic, the percentage decrease in quantity demanded is less than the percentage increase in price. Let's assume $Q_1 = 20$ and $Q_2=18$ (hypothetical values for illustration). $TR_1=15\times20 = 300$ and $TR_2=18\times18=324$.

Answer:

If the elasticity is 0.61 or 0.82 (inelastic), total revenue will increase. If the elasticity is 2.44 or 1.22 (elastic), total revenue will decrease. Without specific quantity values, we rely on the elasticity - revenue relationship. If we assume we need to choose from the given elasticities to confirm the grower's claim (that price increase leads to revenue increase), the relevant elasticities are 0.61 and 0.82 as they indicate inelastic demand.