Ag Business, Supply and Demand

The amount of quantity of a good or service that would be purchased at a given price and at a specific time and place is called.

Demand

What happens to the equilibrium price of a commodity when the supply increases and the demand increases?

It stays the same

What are the two basic types of goods demanded by a consumer?

Luxury items and Necessity items.

What determines price?

Price results from the interaction of the forces of supply and demand.

The equilibrium price of an agricultural product is the point where _______________.

Production (supply) is equal to consumption (demand)

The price received for an agricultural commodity is determined by what?

Quantity produced and the Quality consumed or purchased.

Successful advertising increases demand, thus the demand curve for the product advertised would be ______________.

Shifted to the right

What factors may shift the supply curve.

Supplier expectations, natural forces, storage and perishability, cost of production, technology, government programs, can all shift the supply curve.

The amount or quantity of an agricultural product available for sale at a given price and at a specific place and time is called.

Supply

__________ is a set of various prices and corresponding quantities of a particular agricultural commodity that would be purchased at each price.

A demand schedule

If both demand and supply increased equally for an agricultural product, what will be the results on the quantity sold and the price received?

An increased quantity will be sold at the same price.

The equilibrium price of an agricultural commodity, at a particular point in time, can be determined by using _____________.

Both the supply curve and the demand curve

The higher the price of milk, all other things being equal, the quantity consumed ______________________________.

Cannot be predicted from the information given.

What factors may shift the demand curve?

Consumer income, population, individual taste, competing products, consumer exspectations, advertising and promotions can all shift the demand curve.

As price of an agricultural product increases, the supply _________________.

Decreases

Explain the difference between demand and quantity demand?

Demand is the amount buyers are willing and able to purchase at different prices at a given time and place, quantity demand is how much buyers are willing and able to buy at each specific price. As the price changes the quantity demand will change.

What is the importance of determining the demand or supply price elasticity.

Demand price elasticity will allow an estimate to be made of how much the quantity demanded will change when the price goes up or down. The supply price elasticity will help in estimating how much production will change in price goes up and down.

An increase in the supply of an agricultural commodity results on a shift at the supply curve ________________.

Downward and to the right

How are demand price elasticity and supply price elasticity calculated?

Ed-(Q2-Q1)/Q1 over (P2-P1)/P1

____________ is how responsive the amount of an agricultural product produced or consumed would be to a change on price.

Elasticity

Define elasticity and the three types of elasticity.

Elasticity is the measure of how sensitive the market is to change, in price or quantity. Inelastic-is when the change in price is greater than relative change in quantity. Elastic-is when the change in price is less than the relative change in quantity available.

Relative to demand, most basic agricultural products tend to be

Inelastic

When the change in price is greater than the relative change in quantity produced, an agricultural commodity is said to be ____________________.

Inelastic

Explain the difference between supply and quantity supplied.

Supply is amount of a product or commodity producers are willing and able to provide at different prices at a given time and place. Quantity Supply is how much suppliers are willing and able to provide at a given time.

Define the Law of Supply and show how it can be illustrated.

The law of supply states that when the price of a product is lowered with no change in factors other than price, less of the product will be supplied. If the price of a product is increased, a larger quantity of the product will be supplied.

What is the point of equilibrium?

The point at which the supply curve and demand curve meet.

Define the Law of Demand and show how it can be illustrated.

the law of demand states that when the price of a product increases with no change in factors other than price, less of the product will be purchased. Lower prices means that more of a product will be purchased.