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Additional Application The 2005-2006 Florida Citrus Harvest Has Been Tallied and Is

question 133

Multiple Choice

Additional Application
The 2005-2006 Florida citrus harvest has been tallied and is over $1 billion.This is the highest dollar amount since the 1999-2000 season.This year's production was 3% greater than last year,which was dramatically reduced due to three hurricanes that struck the state last year.While the overall production increase was relatively small,the prices for all types of citrus increased significantly.On the wholesale level oranges alone realized a 56% price increase over the previous year after experiencing a 1.3% decrease from last year.One explanation of this increase was Hurricane Wilma striking Florida in October 2005 and causing a reduction in this year's supply of citrus.The higher citrus prices this year resulted in a 38% increase in revenues to growers over the previous year.
How can the increased revenues to the citrus producers be explained? The law of demand states if the price increases,the quantity demanded decreases.The concept of price elasticity of demand explains that the percentage decrease in quantity demanded may be greater than or less than the percentage increase in price.Is the demand for citrus elastic or inelastic?
"States citrus crop tops $1 billion for first time in six years." September 22,2006.palmbeachpost.com.Retrieved October 3,2006,from http://www.palmbeachpost.com
-If the price of citrus rose and the revenues from citrus production increase,we know that the price elasticity of demand for citrus is:

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