Posted: August 16th, 2016

Canada uses the quota policy to regulate the supply of milk. Explain what you understand by a quota. Why might it be a good idea to get rid of them?

2 A long term rose producer can increase greenhouse rose output per square meter by applying a special fertilizer ROSGROWS. Roses sell for $ 2.00 each and fertilizer costs $ 10.00 per pound. The relationship between fertilizer input (lbs) and the total rose output (number of roses) is indicated in the following table:

a. Complete the table
b. How many pounds of ROSGROWS should this producer apply to maximize profits per square meter? State Clearly the decision rule used to your solution.
c. If all costs except fertilizer are fixed at $ 10.00 per square meter, how much profit per square meter will this producer make when profit is at a maximum?

3 Suppose you observe a 20% increase in quantity supplied when price rises by 10%.
a. What is the value of the price elasticity of supply for this product?
b. By how much would the quantity supplied increase if the price of this product falls from $ 10 per unit to $ 8 per unit?
c. Canada uses the quota policy to regulate the supply of milk. Explain what you understand by a quota. Why might it be a good idea to get rid of them?

4 A farm operator in Alberta has asked you to help him/her determine the quantity of water that should be applied to a crop under irrigation. The crop is being irrigated via a sprinkler system that can be regulated in terms of the number of times per day that water is applied. The total physical product (TPP) for the crop is shown below for different application rates per day. Note that the same amount of water is delivered at each application and that the crop currently sells for $ 2.10 per bushel