One grower believes a price increase from pests will increase revenue, but price elasticity of demand between $20-28/ton for cashews is -1.5, indicating demand is elastic. Therefore, the grower's claim is incorrect because total revenue will fall due to the drop in quantity demanded outweighing the price increase. Calculating total revenue before and after confirms this conclusion.

1. One of the growers is pleased with the price increase caused by the pests because he believes it
will lead to increased 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 cashews between the price levels of $20 and $28 per ton is
between these two points, demand is . Thus, you can conclude that the grower's claim is ,
because total revenue will due to the pestilence. Confirm your previous conclusion by calculating
total revenue in the cashew market before and after the pestilence. Enter these values in the
following table. 14. Application: Demand elasticity and agriculture The following graph
illustrates the market for cashews. It plots the monthly supply of cashews and the monthly
demand for cashews. Suppose an increase in pests destroys a major portion of cashew trees.
Show the effect this shock has on the market for cashews 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.