Exam_II_AEC_305_Fall_2004

# Exam_II_AEC_305_Fall_2004 - AEC 305 Exam II Fall 2004 1...

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AEC 305 Exam II – Fall 2004 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 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. (16 points) a. A 15% increase in the expected price of corn because of an increased demand for livestock feed. b. A 10% decrease 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 2. Assume the following equation represents the supply of wheat in a given region. Q = 34 +2.5 P – 40F where: Q = million bushels of wheat P = price/bushel of wheat F = price/lb of fertilizer Calculate the price elasticity of wheat supply if the price of wheat is \$4.00/bushel and fertilizer is \$0.10/lb. Interpret your elasticity estimate. (10 points)

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

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Exam_II_AEC_305_Fall_2004 - AEC 305 Exam II Fall 2004 1...

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