Assume the following log-linear supply function for coffee beans: ln Qs = 20 + 1.5 ln...
Assume the following log-linear supply function for coffee beans:
ln Qs = 20 + 1.5 ln P +4.6 Ln T + 2.6 ln F where P is the price of coffee beans, T is technology and F is the number of coffee bean growers. If the number of growers increases by 10%, by how much will coffee supply increase?
Homework Answers
We know
d lnQs/d ln F=2.6
which means an increase in F by 1% will lead to an increase in quantity supply by 2.6%
Thus coffee supply will increase by 26% when Number of coffee bean grower increases by 10%
ans is 26%
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