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Demand and supply curve for agricultural products

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Mariana Rodrigues

on 12 April 2013

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Transcript of Demand and supply curve for agricultural products

Demand and supply curve
for agricultural products Mariana and Juing Question 1 If the supply increases in the market and
the supply curve shifts to the right.What
might happen to the equilibrium prices of
the farm produce and the manufacturing
product? Question 2 Will a good harvest be always a blessing for
the farmers?Explain. Question 3 Any Question? Think about it...
??? A.Yes B.No Of course No! Why? Let's think about what would happen to the
supply curve if there is a good harvest.Are
there will be any change? Answer: Bibliographic References http://www.mbs.edu/home/jgans/mecon/value/Segment%204_2.htm
http://www.economicshelp.org/blog/2601/economics/what-explains-volatility-of-oil-and-food-prices/ Which demand curve, D1 or D2, does represent a demand curve for farm produce? Which demand curve does represent a demand curve for manufacturing product? Why? Farm produce: D1
Manufacturing Product: D2 April, 12 EXPLAIN The concept of elasticity can help explain some situations that at first glance
may seem puzzling. If farmers all have excellent harvests, they may have a very poor year financially. They may be better off if they all have mediocre harvests. In the case of the farmers, the key to their problem is that the demand curve for their products is quite inelastic. This means that if the harvest is unusually good, a large drop in price is necessary to
encourage consumers to use the additional grain.
If the elasticity coefficient is .5, for example, and
the harvest is 10% larger than the previous year,
then a 20% drop in prices will occur (assuming that
the many things that we keep constant in drawing
the demand curve have remained constant). Because
this price reduction more than offsets the effect of the larger harvest, the average farmer's income drops.
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