The shrimp harvest was unusually good this year. the demand curve did not shift from last year, but because of the abundant harvest, the price fell from $100 per sack to $85 per sack. the price elasticity of demand for shrimp is - 1.40. what happened to the total revenue of the fishermen? choose the closest answer. (hint: the percentage c

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Palmer

6 November, 09:51

The shrimp harvest was unusually good this year. the demand curve did not shift from last year, but because of the abundant harvest, the price fell from $100 per sack to $85 per sack. the price elasticity of demand for shrimp is - 1.40. what happened to the total revenue of the fishermen? choose the closest answer. (hint: the percentage c

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Preston Reed · Answer 1

Since the shrimp harvest was plentiful, the supply curve will shift to the right on the graph. Usually with a supply increase, the price will drop. The price elasticity is greater than the absolute value of 1. That means that the demand for shrimp is elastic. Thus, more people will buy more shrimp if the price is lower. Total revenue for the shrimp industry should increase. Even though price decreased, revenue grows due to the increase in quantity because it is elastic.