Question
What is the change in short-run prices when food supply is increased?
Data Requirements
- Proportional increase in supply over time
- Price elasticity for demand and supply of the commodity
OR - Quantity of food released
- Short-run supply of food
- Price elasticity for demand and supply of the commodity
| Variables | |
|---|---|
| Δ Pd / Pd | proportional change in the domestic price of the commodity resulting from the increase in supply |
| (Δ Q/Q) | proportional increase in supply |
| εD | price elasticity of demand for the commodity |
| εS | price elasticity of supply for the commodity |
| R | quantity released from reserve |
| S | short-run supply |
Output
The proportional change in price resulting from an increase in supply of a commodity.