Elasticity of Demand for Avocado to the European Market and the United States, Years 2010 – 2020

Abstract

The analysis was carried out for the period from 2010 to 2020, where the production and export volumes of avocado to European and North American countries are shown. The objective of this study is to determine the elasticity of demand for avocado in these countries. “Since Alfred Marshall included it in his work Principles of Economics.

An analysis is made of the statistical series of each variable, its historical evolution, as well as its individual trends.

Based on the following econometric model:

Qd(t) = βo + β1(P)t +β2(Yp)t + β3(TC)t + β4(N) + u

Eviews 9.0 software was used, applying a log-log econometric model where the data series are given in years.

 To measure the elasticity of demand for avocado, the indicators used were consumption, population, per capita income in dollars, and the international price of avocado in dollars.

In the Netherlands, the demand for Peruvian avocado shows the following behavior:

1. A 1% increase in price causes a reduction in demand of 0.16 %.
2. An increase in per capita income of 1% causes the demand for avocado to increase by 2.7%.
3. A 1% increase in population causes the demand of avocado to increase by 8.23 %.

In Spain, the demand for Peruvian avocados shows the following behavior:

1. A 1% increase in price generates a reduction in demand of 0.09 %.
2. If per capita income increases by 1%, the demand for avocado increases by 0.13 %.
3. A 1% increase in population generates that the demand for avocado increases by 3.49%.

In the U.S., demand for Peruvian avocados shows the following behavior:

1. A 1% increase in price generates a reduction in demand of 1.25%.
2. If per capita income increases by 1%, the demand for avocado increases by 16.99%.
3. A 1% increase in population causes the demand for avocado to decrease by 1.38%.

In ENGLAND, the demand for Peruvian avocado shows the following behavior:

1. A 1% increase in price generates a reduction in demand of 0.03 %.
2. If per capita income increases by 1%, the demand for avocado decreases by 0.47%.
3. A 1% increase in population generates that the demand for avocado increases by 3.62%.