You are an economic consultant for the aqua-agriculture industry. You are in a position to provide some
Question:
You are an economic consultant for the aqua-agriculture industry. You are in a position to provide some economic advice to a business in this sector. You have estimated the supply equation using regression estimation techniques. The variables that you have included are Pa (the price of the product itself); Pb and Pc (the prices of related goods in production; Pw reflects wages in the industry; Pi is the price of other inputs (raw materials). Your research indicates that the equation is as follows: Qs = -10 + 5Pa + 4Pb - 3Pc - 10Pw - 5Pi (a) Explain the difference between Goods B and C. How are these goods related differently to Good A? (b) What is the relationship between wages and the price of good A? Explain your answer. (c) If the price of Good B is $20, and the price of Good C is $15, while the wage rate is $15, and the price of other inputs is $10, what is the P intercept of the supply equation? Show the exact calculations for your answer. (d) Suppose that the wage rate decreases to $10. What is the impact on the supply curve? Explain your answer and show the exact calculations for your answer.
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar