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3. Discuss whether the price elasticity of supply of salmon is likely to be high or low.

3. Discuss whether the price elasticity of supply of salmon is likely to be high or low.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Salmon prices on the rise The price of salmon is on an upward trend. Demand for the fish is growing as consumers worldwide have a greater appreciation of its health-giving properties. Supply is struggling to keep up with this trend. Almost all salmon sold today is farmed The weather too can impact on supply. In 2013, Norway suffered colder than usual seawater which inhibited the growth salmon rather than wild salmon caught of salmon and so the total tonnage of salmon produced fell. in the sea or rivers. Rising prices have led to increased profits for salmon farmers. Norway Royal Salmon, for example, reported its highest profits in its 21-year history in 2013. However, despite the incentive of rising profits, there are factors which are holding back the expansion of the industry. In Norway, the largest producer of farmed salmon, production by private firms is restricted by the government, which issues licences. There is also a limit on the number of salmon which can be farmed in one place because of the risk of disease. Figure 12 Salmon prices 60- 50 40 30 Norwegian Krone per kg 20 www Worldwide, the price of fish feed is rising as a result of more fish farming and limited catches of anchovies, an important source of fish feed. 2013 Source: adopted from the Financial Times 15.3.2014, All Rights Reserved. Evaluation Question 3 osks how easily the quantity supplied of salmon can be changed in response to changes in its price. In your answer, write about the short term - if the price solmon doubled today, for example, could the quantity supplied of salmon double in the next year? What are the constraints on increasing supply? Then consider the long term. What are the constraints on increasing supply and how important are they? Come to an overall condusion about the short term and long term. 2012 2014 Source: adapted from Thomson Reuters Dotostream; the Financial Times 15.3.2014, All Rights Reserved. 2.0- 1.5- 1.0- 1. Using Figure 12, identify two significant features of the data shown. In your answer, back up your comments with data. Figure 13 Total world salmon production Million tonnes 2.5 2. Using supply curve diagrams, explain the effects on the supply of salmon of the following described in the artide: (a) a change in profits by fish farmers; (b) licences issued by governments to salmon farmers; a change in fish feed prices; 2008 (c) (d) changes in the weather. 3. Discuss whether the price elasticity of supply of salmon is likely to be high or low. 10 F Total world salmon production 09 12 Source: adapted from Food and Agriculture Organization of the United Notions, GLOBEFISH HIGHLIGHTS, January-Sept 2014, 31.1.2015, Rome, Italy Reproduced with permission. 11 13
Transcribed Image Text:Salmon prices on the rise The price of salmon is on an upward trend. Demand for the fish is growing as consumers worldwide have a greater appreciation of its health-giving properties. Supply is struggling to keep up with this trend. Almost all salmon sold today is farmed The weather too can impact on supply. In 2013, Norway suffered colder than usual seawater which inhibited the growth salmon rather than wild salmon caught of salmon and so the total tonnage of salmon produced fell. in the sea or rivers. Rising prices have led to increased profits for salmon farmers. Norway Royal Salmon, for example, reported its highest profits in its 21-year history in 2013. However, despite the incentive of rising profits, there are factors which are holding back the expansion of the industry. In Norway, the largest producer of farmed salmon, production by private firms is restricted by the government, which issues licences. There is also a limit on the number of salmon which can be farmed in one place because of the risk of disease. Figure 12 Salmon prices 60- 50 40 30 Norwegian Krone per kg 20 www Worldwide, the price of fish feed is rising as a result of more fish farming and limited catches of anchovies, an important source of fish feed. 2013 Source: adopted from the Financial Times 15.3.2014, All Rights Reserved. Evaluation Question 3 osks how easily the quantity supplied of salmon can be changed in response to changes in its price. In your answer, write about the short term - if the price solmon doubled today, for example, could the quantity supplied of salmon double in the next year? What are the constraints on increasing supply? Then consider the long term. What are the constraints on increasing supply and how important are they? Come to an overall condusion about the short term and long term. 2012 2014 Source: adapted from Thomson Reuters Dotostream; the Financial Times 15.3.2014, All Rights Reserved. 2.0- 1.5- 1.0- 1. Using Figure 12, identify two significant features of the data shown. In your answer, back up your comments with data. Figure 13 Total world salmon production Million tonnes 2.5 2. Using supply curve diagrams, explain the effects on the supply of salmon of the following described in the artide: (a) a change in profits by fish farmers; (b) licences issued by governments to salmon farmers; a change in fish feed prices; 2008 (c) (d) changes in the weather. 3. Discuss whether the price elasticity of supply of salmon is likely to be high or low. 10 F Total world salmon production 09 12 Source: adapted from Food and Agriculture Organization of the United Notions, GLOBEFISH HIGHLIGHTS, January-Sept 2014, 31.1.2015, Rome, Italy Reproduced with permission. 11 13
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