Part 1
1. You can’t go to a farmer and tell him, 'We need your cows to start having more babies.' It takes time. What does this imply about the elasticity of supply with regards to beef.
2. Usually higher potato prices provide incentives for farmers to plant more. Not this time, because of how high the costs are…" Has the high cost of potatoes made the supply curve for potato chips more elastic or more inelastic? Briefly explain your answer.
3. analysts say that the combination of low inventories and spare capacity have historically been resolved by sharp price rallies …The difference these days is shale. Last decade’s fracking boom proved there are huge domestic reserves [of oil] that can be tapped quickly by a swarm of producers if the price is right." What does this statement imply about how the "fracking boom" has affected the price elasticity of supply for crude oil?