Answer to Question #156329 in Macroeconomics for liz

Question #156329

Internationally, the average rice farmer has increased the amount of acreage under cultivation over the past few years. The result has been that the average rice plantation produces significantly more rice than it did 15 to 20 years ago. Unfortunately for the growers, however, this has also been a period in which their total revenues have plunged. In terms of elasticity, what must be true for these events to have occurred? Explain these events with the aid of a diagram.

Expert's answer

Answer :

Meaning of grower: The term 'grower' appears to be used in reference to people who grow horticultural food crops, grow flowers or edible food / crops.

Farmer: Therefore a farmer is someone who not only grows food from the land but also sells that produce to consumers.

Price elasticity of supply : The technical definition of elasticity is the proportionate change in one variable over the proportionate change in another variable.


% change in quantity / %in price

There is positive relation between pand quantity.

P↑ Q↑ positive relation - -

According to the question - - -

Suppose in year 15 to 20 amount would be 80 acreage

Response quantity supplied would be 60 quartile

But after increasing the amount of acreage

106 response quantity supplied will be 100

Putting in formula for farmers

If increase in price TR increase more then price elasticity will be >1

In this diagram quantity increases more that's why TR increases more so Pes = >1

Other hand for grower

Pes = less than 1

because quantity is not increased according to the amounts and TR also is not increased too much.

So farmers TR will be more, Grower TR will be less

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!


No comments. Be first!

Leave a comment

Ask Your question

New on Blog