Question 3 please thanks 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.Almost all salmon sold today is farmedThe weather too can impact on supply. In2013, Norway suffered colder than usualseawater which inhibited the growthsalmon 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 thegovernment, 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 prices60-504030Norwegian Krone per kg20wwwWorldwide, the price of fish feed is risingas a result of more fish farming andlimited catches of anchovies, an importantsource of fish feed.2013Source: 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 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.20122014Source: adapted from Thomson Reuters Dotostream; the Financial Times15.3.2014, All Rights Reserved.2.0-1.5-1.0-1. Using Figure 12, identify twosignificant features of the datashown. In your answer, back up yourcomments with data.Figure 13Total world salmon productionMillion tonnes2.52. 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;a change in fish feed prices;2008(c)(d) changes in the weather.3. Discuss whether the price elasticityof supply of salmon is likely to behigh or low.10FTotal world salmon production0912Source: adapted from Food and Agriculture Organization of the UnitedNotions, GLOBEFISH HIGHLIGHTS, January-Sept 2014, 31.1.2015, Rome, ItalyReproduced with permission.1113

In economics, the term "elasticity" basically refers to the way in which the total amount of an item…

Answered: 3. Discuss whether the price elasticity…

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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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