10. Commodity Production

Question 1

What is considered a commodity/raw product?

Answer 1

Ag products at the farm level
Most individual producers cannot distinguish their product from another, therefore cannot drive or influence supply and demand

Question 2

Define: Price Taker

Answer 2

Cannot control the sale of their product
In response, control cost of production (low cost production)
Increase production per unit of ‘input’ to increase margin of profit
Increase total production to increase number of ‘units’ sold

Question 3

What forces of nature impact agricultural production?

Answer 3

Rain v drought, hail, storms, frosts

Question 4

Define: Boom/Bust

Answer 4

Once a production cycle is begun, it is difficult to alter
E.g. buy too many cows (boom), no one wants to buy cows (bust)