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QUESTION
The supply function of a certain commodity is Q = a + b P2 + W1/2, where P is price and W is weather-related conditions affecting the supply. Assume...
The supply function of a certain commodity is
Q = a + b P2 + W1/2, where P is price and W is weather-related conditions affecting the supply. Assume that a<0 and b >0.
Find the price elasticity of supply (εQP) and the weather elasticity of supply (εQW) . Explain intuitively what those elasticities mean. (4 points)
