Graph the inverse supply curve when corn sells

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The supply of wheat is given by the following equation: QwSwcfwSwcf = -6 + 4 P - 2 P - P where Q is the quantity of wheat supplied; P in the price of wheat per bushel; P is the price of corn per bushel; and P is the price of tractor fuel per gallon.

a. Graph the inverse supply curve when corn sells for $4 a bushel and fuel sells for $2 a gallon. What is the supply choke price?

b. How much wheat will be supplied at a price of $4? $8?

c. What will happen to the supply of wheat if the price of corn increases to $6 per bushel? Explain intuitively, then graph the new inverse supply curve carefully and indicate the new choke price.

d. Suppose instead that the price of corn remains $4, but the price of fuel decreases by $1. What will happen to the supply of wheat as a result? Explain intuitively, then graph the new inverse supply. Be sure to indicate the new choke price.

Reference no: EM132617924

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