Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

From your principal of Microeconomics class, recall the definition of price of elasticity of demand: = percentage change in quantity/percentage change in price We can

From your principal of Microeconomics class, recall the definition of price of elasticity of demand:

= percentage change in quantity/percentage change in price

We can use price elasticities to determine whether markets are in fact perfectly competitive (or at least close to perfectly competitive). The following table summarizes estimated price elasticities for US farmers.

Crop Numbers of farms Individual farm's elasticity of demand
Apples 41,187 -8,649
Sweet Cherries 14,078 -10,840
Grapes 24,982 -3,997
Peaches 23,121 -5,813
Pears 13,244 -21,711
Plums/prunes 11,186 -7,047
Snap bears 12,260 -11,544
Sweet corn 29,260 -31,353
Cucumber 9,935 -5,668
Lettuce 2,452 -809
Dry onions 3,516 -2,074
Peas 8,204 -5,579
Tomatoes 17,290 -2,766

Does this data support the hypothesis that agriculture markets are (close to) perfectly competitive? Explain your answer.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey Of Economics

Authors: Irvin B. Tucker

10th Edition

133711152X, 978-1337111522

More Books

Students also viewed these Economics questions