Question

Almonds are a crop that grows on trees. Farmers do not need to replant trees every year to produce a crop of almonds. It takes at least five years after planting for trees to bear fruit. Several factors such as weather, disease, and long term projections about price impact the supply of almonds available. Barley is a grass that must be planted each year to produce a crop. The growing season is short, about three to four months. Several factors influence farmers' decisions to plant barley each year, including price, weather, and disease.
Based on this information. Which of the followings are true?

a. Almonds have a more inelastic supply in the short run because little can be done to change production in the short run.
b. It is impossible to infer anything about the price elasticity of supply for these two crops.
c. Barley has a more inelastic supply in the short run because barley is more dependent on price in the short run.
d. The crops have the same price elasticity of supply because they are both agricultural commodities.

Answer 1

Answer: a. Almonds have a more inelastic supply in the short run because little can be done to change production in the short run.

Explanation:

Based on the scenario given in the question, the correct answer will be:

(a) almonds have a more inealstic supply in the short run because little can be done to change production in the short run.

Due to the fact that option the determinants of supply of almonds and barley are mentioned, option (b) isn't correct.

For option (c), the supply of barley isn't inelastic. This can be seen as the output of barley can be increased more than the output of almond.

For option (d), just because they're both agricultural commodities doesn't mean that they'll have same price elasticity of supply.