Question
Q.3.The estimated supply function for tomatoes is Q = 58 - 15p - 20p f , where p f is the price of fertilizer. Provide
Q.3.The estimated supply function for tomatoes is Q = 58 - 15p - 20pf, where pf is the price of fertilizer. Provide answers to the following questions. Note: If calculations are involved, provide all the steps of calculations. If plots are needed for explanation, label the plots clearly with different points of X-axis and Y-axis.Show all your calculations. [2 + 2 + 2 = 6]
(a)Explain why a change in the price of fertilizer causes a shift in the supply curve for tomatoes rather than a movement along the supply curve for tomatoes.
(b)Determine how much the supply curve for tomatoes shifts if the price of fertilizer rises by Rs.1.10 per Kg. Illustrate this shift in a diagram.
(c)Holding the price of fertilizer constant, by how much would the price of tomatoes need to rise to cause an increase of 60 million Kg per month in the quantity of tomatoes supplied?
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