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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.
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