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Carefully evaluate: “The supply and demand for agricultural products are such that small

 Carefully evaluate: “The supply and demand for agricultural products are such that small changes in agricultural supply result in drastic changes in prices. However, large changes in agricultural prices have modest effects on agricultural output.” (Hint: A brief review of the distinction between supply and quantity supplied may be helpful.) Do exports increase or reduce the instability of demand for farm products? Explain.

2. What relationship, if any, can you detect between the facts that farmers’ fixed costs of production are large and the supply of most agricultural products is generally inelastic? Be specific in your answer.

3. Explain how each of the following contributes to the farm problem: ,

a. The inelasticity of demand for farm products.

b. The rapid technological progress in farming.

c. The modest long-run growth in demand for farm commodities.

d. The volatility of export demand.

Dec 05 2019 View more View Less

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