Demand And Supply Agriculture Flashcards
Agricultural prices in the short run
Show price instability
Commodity
Good which could be swapped with any other good of the same type without any noticable difference.
Agricultural goods affected by
Disease weather which are both unpredictable.
Agricultural products have
Inelastic price Elasticities of demand and supply
Which means
Small increase or decrease in quantity supplied has a large impact on price.
Price instability effects
Reduces or prevent investment due to uncertainties about returns on any investment.
Causes periods of low income and high unemployment in countries dependent on exporting agricultural products.
Increase in the price of food has an effect on peoples wealth. Because food takes a major part of peoples monthly expenditure.
Higher food prices
Negative impact on the economy
less money to be spent on other goods
Changes in income
Have little impact on demand for agricultural products.
Generally income inelastic.
Increase in income change
The quality of the agricultural products demanded.
Long run prices for agricultural products
Are declining.
Factors that affect long run supply of agricultural products
Tech improvements, increase supply of good, quality, land and changes to the climate.
Factors that affect Long run demand
Changing incomes and consumer preferences
Buffer stocks can
Affect the price of agricultural products
Buffer stocks involve
Government setting min and max prices for product.
Aim of buffer stocks
Stabilise market prices for particular products and prevent shortages.
If price mechanism causes price of product to go outside agreed price range
Gov buy or sell the products until the price returns to the agreed range.
