2007ExamII

# 2007ExamII - AEC 305 Exam II Fall 2007(105 points Name 1 Briefly indicate how each of the following events would affect the U.S supply for corn AND

This preview shows pages 1–3. Sign up to view the full content.

AEC 305 Exam II – Fall 2007 (105 points) Name ______________________________________________ 1. Briefly indicate how each of the following events would affect the U.S supply for corn AND whether it would be illustrated as a movement along a given supply curve for corn , a shift (in which direction) in the supply curve for corn , or have no affect on the supply curve for corn. Note: you do not need to draw any graphs to answer this question, just explain. (4 points each) a. A 10% increase in the expected price of corn because of an increased demand for livestock feed overseas. b. A 10% increase in the expected price of soybeans. c. The development of a new variety of corn that increases yields by 10%. d. A 10% increase in personal income e. An increase in the price of fertilizer (an input to produce corn) 2. Define the term price elasticity of supply. Would you expect the short-run price elasticity of supply for corn to be relatively small or large in the Midwest, where most of the U.S. corn production is grown? Explain your answer. (5 points) 3. Assume the following equation represents the supply of wheat in a given region. Q = 34 +2.5 P W – 40 P F where: Q = million bushels of wheat P W = price/bushel of wheat P F = price/lb of fertilizer Set up an expression (i.e., you do not need to solve ) the price elasticity of wheat supply if the price of wheat is \$4.00/bushel and fertilizer is \$0.10/lb. (5 points)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
4. We read several articles in class this semester discussing the controversial issue of using an increasing quantity of corn to produce fuel (ethanol and biodiesel). As an agricultural economist you have been asked by the U.S. Congress to testify how this may affect agricultural consumers and producers. What are the key points of your testimony? Be sure to discuss the potential magnitude this may have on grain and livestock farmers and food prices. Is this the major reason
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 02/07/2011 for the course AEC 305 taught by Professor Staff during the Fall '08 term at Kentucky.

### Page1 / 4

2007ExamII - AEC 305 Exam II Fall 2007(105 points Name 1 Briefly indicate how each of the following events would affect the U.S supply for corn AND

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online