The Demand for Seafood in the U.S.
The Daily Comet editorializes on this past year’s seafood market. It seems as if Americans cut back on eating seafood this past year, while spending more money buying seafood. Assuming that the demand for seafood held steady during this period, does this article imply a violation of the law of demand? What does this imply about the elasticity of demand? Is it elastic, inelastic or unitary elastic?
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MC
February 28th, 2007 at 8:44 pm
I believe that this does not violate the law of demand and futhermore it is showing that behavior of elasticity
March 1st, 2007 at 12:08 am
Bryan,
You need a little more there. There are two ranges of elasticity, one termed elastic and the other, inelastic. In the elastic range, the elasticity measure is greater than one and in the inelastic range, it is less than one. Right between the two, elasticity equals one, and it is called unitary (just meaning one) at that point. So, in this case, which is? Hey, answer this after your exam tomorrow and after you have had a chance to read the chapter on elasticity.
MC
May 10th, 2007 at 7:02 pm
If the demand for seafood remained steady but americans paid more this year, then you have to conclude that the supply went down therefore, this does not violate the law of demand. With a rise in the price of seafood for American consumers we will see a relatively more drastic reduction in quantity consumed due to the high price hence elasticity of demand. The suppliers can control the price of seafood based off the supply of seafood so the demand for seafood in the U.S. is elastic and the price for seafood in the U.S. is elstic.
May 11th, 2007 at 12:03 pm
Sorry Geri,
When demand is elastic, price and revenue move in opposite directions. Here prices went up, so revenues and spending on seafood would have to come down if the overall demand for seafood were elastic, but, according to the article, spending on seafood has gone up, signaling an inelastic demand. The demand for any one seafood supplier is still elastic, but the market demand is inelastic here.
MC