14. Application: Demand elasticity and agriculture The following graph illustrates the market for walnuts. It plots the monthly supply of walnuts and the monthly demand for walnuts. Suppose new gathering technology is invented, allowing growers to produce more crops using the same amount of resources. Show the effect this shock has on the market for walnuts 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. ? O Demand 32 Supply Supply PRICE (Dollars per ton) Demand 12 24 36 48 80 QUANTITY (Thousands of tons) Several growers are happy with this advancement in technology because now they can sell more crops, which they believe will lead to increases in 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 walnuts between the price levels of $20 and $12 per ton is , meaning that between these two points, demand is Thus, you can conclude that the grower's claim is because total revenue will due to the technological improvement. Confirm your previous conclusion by calculating total revenue in the walnut market before and after the technological improvement. Enter these values in the following table. Before Technological Improvement After Technological Improvement Total Revenue (Thousands of Dollars)