5. Application - Demand elasticity and agriculture Consider the market for soybeans. The following graph shows the weekly demand For soybeans and the weekly supply of soybeans. Suppose a spell of unusually good weather occurs, which enables soybean producers to generate more soybeans per acre of land. Show the effect this shock has on the market for soybeans 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. 20 O S l 16 W Demand n El E g S n 12 Supply E D. (I) E a \\ Q, a -___________ L\" I Q m I l I Demand 4 ._ I I I I l] 7 l I l 0 10 20 30 40 50 QUANTITY (Millions [If bushels) One of the growers 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 this change ll"l price will lead to an increase or decrease in total revenue in this market. One of the growers 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 this change in price will lead to an increase or decrease in total revenue in this market. Using the midpoint method, the price elasticity ofdemand for soybeans between the prices of $10 and $8 per bushel is 0.82 Y , which means demand is inelastic V between these two points. Therefore, you would tell the grower that his claim is correct V , because total revenue will decrease V as a result of the spell of good weather. Confirm your brewous conclusion by calculating total revenue m the soybean market before and after the spell of good weather. Enter these values in the followlng table. Before Spell of Good Weather After Spell of Good Weather Total Revenue (Millions of Dollars) Cl C