Problem 2.In the table below are some estimates of price elasticities for different products. Use the estimates to answer the questions below.

Product

Demand elasticities

Supply elasticities

Retail level

Farm level

Short run

Long run

Beef

-0.64

-0.42

0.31

0.75

Chicken

-0.78

-0.60

0.90

1.25

Maize

-0.35

-0.20

0.40

1.35

(a)Interpret the value of the price elasticity of demand for beef at the retail level and at the farm level.Interpret the value of the price elasticity of supply of maize in the short run and long run.

(b)Which of the elasticities are elastic, inelastic and unitary elastic?

(c)Explain why farm level price elasticities of demand are smaller, in absolute value terms, than the retail level price elasticities. Does this make sense?

(d)Explain why the long run price elasticities of supply are larger in magnitude when compared with the short-run price elasticities. Does this make sense? Would you expect long-run price elasticities of demand to be greater than short-run elasticities?Explain.