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Unformatted text preview: the price by 5% in 2006? Question 2 The following supply function was estimated for milk: Q s = 80P 30F 50W + 150T Where: Q s = quantity supplied (3,600 cwt. Average), P = milk price ($15.00/cwt.), F = feed cost ($60/ton average), W = average hourly wage paid for labor ($7.20/hour average), and T = index of technology (average is 4). a) Compute the own price elasticity of supply. b) Compute the elasticity of supply with respect to feed cost. c) Compute the elasticity of supply with respect to technology. d) Compute the elasticity of supply with respect to wage rate. e) Based on the elasticity of supply with respect to wages, what would happen to supply if the average wage increased from $7.20 to $7.56 per hour?...
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This test prep was uploaded on 02/20/2009 for the course AEM 4150 taught by Professor Kaiser,h.m. during the Fall '07 term at Cornell University (Engineering School).
- Fall '07