4. Application: Demand elasticity and agriculture

The following graph illustrates the market for pistachios. It plots the monthly supply of pistachios and the monthly demand for pistachios. 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 pistachios 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.

40 Demand 32 Supply 24 Supply PRICE (Dollars per ton) 16 Demand 8 0 8 16 24 32 40 QUANTITY (Thousands of tons)