Input Price Uncertainty and Factor Demand
S. Devadoss, E. Kwan Choi
June 1987 [87-WP 25]
Devadoss, S. and E.K. Choi. 1987. "Input Price Uncertainty and Factor Demand." Working paper 87-WP 25. Center for Agricultural and Rural Development, Iowa State University.
A simple two-input and one-output model is used to examine the effects of variable input price uncertainty on a quasi-fixed factor. These theoretical results, applied to a livestock firm, indicate that choice of the quasi-fixed factor depends upon the attitude of the farmer toward risk and whether the inputs are complements, substitutes, or independents.