Consider the market for apples The following graph shows the

Consider the market for apples. The following graph shows the weekly demand for apples and the weekly supply of apples. Suppose a spell of good weather occurs, which allows apple farms to generate more apples per acre of land. Show the effect this shock has on the market for apples by shutting the demand curve, or both. One of the farmers is concerned about the price decrease caused by the spell of good weather because he feels it will lower revenue in this market. As an economics student, you can use elasticities to determine whether the 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 $10 and $6 per bushel is which means demand is between these two points. Therefore, you would tell the farmer that his claim is because total revenue will as a rest of the spell of good weather.

Solution

Answer to 1st blank: -0.67

Answer to 2nd blank: inelastic

Answer to 3rd blank: true

Answer to 4th blank: decrease

	Before spell of good weather($)	After spell of good weather($)
Total Revenue	200	168