Need help with Evaluation EvolutionQuestion 3 asks 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 of salmon doubled today, for example, could the quantity supplied of salmon double in the next year? What are the constroints 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. Salmon prices on the riseThe price of salmon is on an upwardtrend. Demand for the fish is growingas consumers worldwide have agreater appreciation of its health-givingproperties. Supply is struggling to keepup with this trend.The weather too can impact on supply. In2013, Norway suffered colder than usualseawater which inhibited the growthAlmost all salmon sold today is farmedsalmon rather than wild salmon caught of salmon and so the total tonnage ofsalmon produced fell.in the sea or rivers. Rising prices haveled to increased profits for salmonfarmers. Norway Royal Salmon, forexample, reported its highest profits inits 21-year history in 2013.However, despite the incentive ofrising profits, there are factors whichare holding back the expansion ofthe industry. In Norway, the largestproducer of farmed salmon, productionby private firms is restricted by thegovemment, which issues licences.There is also a limit on the number ofsalmon which can be farmed in oneplace because of the risk of disease.Figure 12Salmon prices60504030-Worldwide, the price of fish feed is risingas a result of more fish farming andlimited catches of anchovies, an importantsource of fish feed.Norwegian Krone per kgSource: adopted from the Financial Times15.3.2014, All Rights Reserved.EvaluationQuestion 3 osks how easily the quantitysupplied of salmon can be changed inresponse to changes in its price. In youranswer, write about the short term-if theprice of solmon doubled today, for example,could the quantity supplied of salmondouble in the next year? What are theconstraints on increasing supply? Thenconsider the long term. What are theconstraints on increasing supply and howimportant are they? Come to an overallcondusion about the short term andlong term.201220132014Source: adopted from Thomson Reuters Dotostream; the Financial Times15.3.2014, All Rights Reserved.2.01.5-1. Using Figure 12, identify twosignificant features of the datashown. In your answer, back up yourcomments with data.Figure 13Total world salmon productionMillion tonnes2.51.0-2. Using supply curve diagrams,explain the effects on the supply ofsalmon of the following described inthe artide:(a) a change in profits by fishfarmers;(b) licences issued by governmentsto salmon farmers;(c)a change in fish feed prices;(d) changes in the weather.3. Discuss whether the price elasticityof supply of salmon is likely to behigh or low.Total world salmon production101120080912Source: adopted from Food and Agriculture Organization of the UnitedNotions, GLOBEFISH HIGHLIGHTS, January-Sept 2014, 31.1.2015, Rome, ItolyReproduced with permission.13

Solution for Question 3: Price elasticity of supply measures the responsiveness in quantity supplied…

Answered: Need help with Evaluation Evolution…

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA