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consider some determine

Economics

consider some determine. of the pnce elasticity of demand: 
• The avallabillty of close substItutes • Whether the good is a necesity or a luxury • How broadly you define the market • The time horlzon being considered 
A good wl. many close substitutes is 11.1y . have relatively  demand, slnce consumers can easily choose to purchase one of the close substitutes if the price of .e good rises. 
A goo. prIce elasticIty of demand depends in part on how necessary it Is relative to other goods. If the followIng goods are priced approximately the same, which one has the most elastic Oman, 
A tractor for farmers 
The prlce elashcity of demand for a good also depends on how you define the good. 
 

prIce ehstiay of demand for a good also depends on how you define the good 
Organize the goods found In the following table by Indicating which is likely to have the most elastic demand, wySlc s to have the least elastic demand, and which MU have demand Mat fa. in between. 
Categories Most Elastic In Between Least Elastic 
RS bell peppers 0 
0 0 
Food 0 0 0 
Vegetables 
0 0 0 
The pH. ehstiay of demand Is also affected lay the given time horzon. 
Compared to the short-run demand for oil, the demand for oil in the long run will tend to he elastic. 
 

Consider the market for soybeans. 'Me followlng graph shows the weekly demand for soybeans and the weekly supply of soybeans. Suppose new farming technology Is developed that enables growers to produce more crops with the same resources. 
Show the effect Ms shock has on the market tor soybeans by shifting the demand curve, supply curve, or both. 
Note Select a. (hag one or both of the curves to the desired position. Curves wIll snap into posItIon, so If you t, to move a curve a. it snaps back to its origInal position, Just d, it a little farther. 

zo .1,3 QUANTITY (1,41111ons of bushels) 
One of the growers is excited by this advancement because now she can .11 more crops, whIch she believes will increase reven. in this market. As an economics student, you can use elasncities to determine whether this change In pnce will lead to an Increase or decrease In to. revenue in thls market. 
Using the mldpoint method, the price elasncity of demad for soybeans between the prIces of $15 and $9 per bushel N , 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. 
Confirm your previous conclusion by calculating total revenue in the soybean mar/m[12.re and alter the technological advancement. Enter these values In the following table. 
Before Technoloplcal Advancement After Technoloplcal Advancement 
Total Revenue (Millions of Dollars) 
 

The following waif. displays four supply curves (1111, II, II, and KO that Intersect at poInt 


QUANTITY (UMW) 

Using thg,ph, co.).th tadra th.t ThU ,byThdkMk,g whether eac statement s true or false. 
Statement 
True Fa Ise 
Curve 31 is more elastic between pthA d D than curve Mt 0 between points and C 0 0 
Between points a. E, curve XX is unit elastic. 
0 0 
Between points and 0, curve .0 is elastic. 
0 0 
 

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