Need help with Evaluation Evolution Question 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.
Need help with Evaluation Evolution Question 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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 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.
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.
The weather too can impact on supply. In
2013, Norway suffered colder than usual
seawater which inhibited the growth
Almost all salmon sold today is farmed
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
govemment, 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-
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.
Norwegian Krone per kg
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 of 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
2013
2014
Source: adopted from Thomson Reuters Dotostream; the Financial Times
15.3.2014, All Rights Reserved.
2.0
1.5-
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
1.0-
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;
(c)
a change in fish feed prices;
(d) changes in the weather.
3. Discuss whether the price elasticity
of supply of salmon is likely to be
high or low.
Total world salmon production
10
11
2008
09
12
Source: adopted from Food and Agriculture Organization of the United
Notions, GLOBEFISH HIGHLIGHTS, January-Sept 2014, 31.1.2015, Rome, Itoly
Reproduced with permission.
13
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