Economic Principles in Agribusiness: Supply and Demand Supply and... · Web viewQuestions about cell phones and cell phone plans Cross Price Elasticity iPhone demand if app price

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Economic Principles in Agribusiness EP5 Supply and Demand

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Demand

Quantity Demanded

Law of Demand

Demand Shifters

Effect of the demand curve if the demand increases:

Effect of the demand curve if the demand decreases:

Luxury items

Necessity items

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Supply

Quantity Supplied

Law of Supply

Supply Shifters

Effect of the supply curve if the supply increases:

Effect of the supply curve if the supply decreases:

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Price

Relationship between demand and price

Relationship between supply and price

Equilibrium

Shortage

Surplus

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Elasticity

Inelastic

Elastic

Unit Elastic

Demand price elasticity

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Cross price elasticity

Income Elasticity of Demand

Supply price elasticity

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EP5.1

Demand Curve

Demand schedule for a slice of pizza

Price/Slice Slices of Pizza Bought

$.50

$1.00

$2.00

$3.00

$4.00

Chart the demand schedule to create a demand curve.

Draw in red, the demand curve if there is an increase in demand for a slice of pizza.

Draw in blue, the demand curve if there is a decrease in demand for a slice of pizza.


0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Slices of Pizza Bought

EP5.2

Supply Curve

Supply schedule for a slice of pizzaPrice/Slice Slices of Pizza Sold

$4.00

$3.00

$2.00

$1.00

$.50

Chart the supply schedule to create a supply curve

Draw in red, the supply curve if there is an increase in supply for a slice of pizza.

Draw in blue, the supply curve if there is a decrease in supply for a slice of pizza.


0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Slices of Pizza Sold

EP5.3

Demand Price Elasticity

The price of a movie ticket is $9.00, and the theater decides to lower it to $8.00. The attendance increases an average of 20 people per movie at $9.00 to 30 people per movie at $8.00.

Was lowering the price a good management decision?

Your scenario:

Did you make a good management decision? Why or why not?

Cross Price Elasticity

When beef was $3, there was 100 lbs. available to consumers. At that price of beef, hamburger buns were $2 with 250 packages available to consumers. Soon after, the price of beef increased to $3.50. At this new price, only 80 lbs. of beef were available to consumers. The price of hamburger buns remained at $2, but 300 packages were now available to consumers. Figure the cross price elasticity of these products.

Are these products substitutes or compliments?


EP5.3


When Peter has $200 of income left over at the end of the month, he chooses to buy 10 steaks from the supermarket. A few months later, Peter got a raise and now has $400 left over at the end of each month. He now buys 30 steaks when he goes grocery shopping. What is his income elasticity of demand?

Is steak a normal or inferior good?

Supply Price Elasticity

Gage County elevator buys corn from local producers and resells it as livestock feed. During January, this elevator paid $7.00 per bushel. At this price, producers have been willing to supply 10,200 bushels per day, but there is not enough to meet demand. Therefore, the elevator decides to raise the price to $7.25 per bushel. Producers are now willing to supply 11,450 bushels per day.

What is the elasticity of supply?


EP5.3 KEY

Demand Price Elasticity

The price of a movie ticket is $9.00, and the theater decides to lower it to $8.00. The attendance increases an average of 20 people per movie at $9.00 to 30 people per movie at $8.00.

ED=(Q2−Q1)÷Q1

(P2−P1 )÷P1

ED=(30−20 )÷20

(8−9 )÷9 ED=10÷20

−1÷9 ED=1020× 9

−1= 90

−20= 9

−2=−4.5

Was lowering the price a good management decision? Yes – the absolute value of 4.5 is greater than 1, meaning the demand elastic and total revenue will increase with a cut in price as more people come.

Your scenario:

Did you make a good management decision? Why or why not?

Cross Price Elasticity

When beef was $3, there was 100 lbs. available to consumers. At that price of beef, hamburger buns were $2 with 250 packages available to consumers. Soon after, the price of beef increased to $3.50. At this new price, only 80 lbs. of beef were available to consumers. The price of hamburger buns remained at $2, but 300 packages were now available to consumers. Figure the cross price elasticity of these products.

Are these products substitutes or compliments? Substitutes


EP5.3 KEY


When Peter has $200 of income left over at the end of the month, he chooses to buy 10 steaks from the supermarket. A few months later, Peter got a raise and now has $400 left over at the end of each month. He now buys 30 steaks when he goes grocery shopping. What is his income elasticity of demand?

Is steak a normal or inferior good? Normal

Supply Price Elasticity

Gage County elevator buys corn from local producers and resells it as livestock feed. During January, this elevator paid $7.00 per bushel. At this price, producers have been willing to supply 10,200 bushels per day, but there is not enough to meet demand. Therefore, the elevator decides to raise the price to $7.25 per bushel. Producers are now willing to supply 11,450 bushels per day.

ES=(Q2−Q1 )÷Q1

(P2−P1 )÷ P1

ES=(11,450 –10,200 )÷10,200

(7.25 –7.00 )÷7 ES=1250÷10,200

.25÷7

ES=1250

10,200× 7

.25=.1225×28=3.43

What is the elasticity of supply? Because 3.43 is greater than one, the supply of corn from storage is elastic.


EP5.4

Supply and Demand CDE Practice

The above graph represents supply of beef for import into the U.S. (SF) the supply of beef produced in the U.S. (SUS), the total supply of beef in the U.S. (ST), the foreign demand for U.S.

beef (DF), the domestic demand for beef (DUS), and the total demand for beef (DT) in the U.S.

23. What is the market equilibrium price of beef in the U.S.? A. P1 B. P2 C. P3 D. P4 E. None of the above

24. At the market equilibrium price, how much beef will be exported from the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

25. At the market equilibrium price, how much beef will be imported into the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

26. At what price would beef imports equal beef exports? A. P1 B. P2 C. P3 D. P4 E. None of the above


EP5.4

The above graph represents the supply of foreign pork available for importinto the U.S. (SF), the supply of pork produced in the U.S. (SUS), the totalsupply of pork in the U.S. (ST), the foreign demand for U.S. pork (DF), thedomestic demand for pork (DUS), and the total demand for pork (DT).

23. What is the market equilibrium price of pork in the U.S.? A. P1 B. P2 C. P3 D. P4 E. None of the above

24. At the market equilibrium price, how much pork will be imported into the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

25. At the market equilibrium price, how much pork will be exported? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5 26. Without foreign trade, the equilibrium price of pork would be A. P1 B. P2 C. P3 D. P4 E. None of the above


EP5.4

The above graph represents supply of pork for import into the U.S. (SF) the supply of pork produced in the U.S. (SUS), the total supply of pork in theU.S. (ST), the foreign demand for U.S. pork (DF), the domestic demand forpork (DUS), and the total demand for pork (DT) in the U.S.


24. At the market equilibrium price, how much pork will be imported from the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

25. At the market equilibrium price, how much pork will be consumed in the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

26. At what price would pork imports equal pork exports? A. P1 B. P2 C. P3 D. P4 E. None of the above


EP5.4 KEY

Supply and Demand CDE Practice

The above graph represents supply of beef for import into the U.S. (SF) the supply of beef produced in the U.S. (SUS), the total supply of beef in the U.S. (ST),

the foreign demand for U.S. beef (DF), the domestic demand for beef (DUS), and the total demand for beef (DT) in the U.S.

23. What is the market equilibrium price of beef in the U.S.? A. P1 B. P2 Where total supply and total demand meet C. P3 D. P4 E. None of the above

24. At the market equilibrium price, how much beef will be exported from the U.S.? A. Q1 B. Q2 Foreign demand for U.S. Beef C. Q3 D. Q4 E. Q5

25. At the market equilibrium price, how much beef will be imported into the U.S.? A. Q1 B. Q2 Supply of beef for import into the U.S. C. Q3 D. Q4 E. Q5

26. At what price would beef imports equal beef exports? A. P1 B. P2 Where foreign demand and foreign supply meet C. P3 D. P4 E. None of the above


EP5.4 KEY

The above graph represents the supply of foreign pork available for importinto the U.S. (SF), the supply of pork produced in the U.S. (SUS), the totalsupply of pork in the U.S. (ST), the foreign demand for U.S. pork (DF), thedomestic demand for pork (DUS), and the total demand for pork (DT).

23. What is the market equilibrium price of pork in the U.S.? A. P1 B. P2 Where total supply and total demand meet C. P3 D. P4 E. None of the above

24. At the market equilibrium price, how much pork will be imported into the U.S.? A. Q1 B. Q2 Foreign supply – pork available for import into U.S. C. Q3 D. Q4 E. Q5

25. At the market equilibrium price, how much pork will be exported? A. Q1 B. Q2 Foreign demand for U.S. pork C. Q3 D. Q4 E. Q5 26. Without foreign trade, the equilibrium price of pork would be A. P1 B. P2 Where SUS and DUS meet C. P3 D. P4 E. None of the above


EP5.4 KEY

The above graph represents supply of pork for import into the U.S. (SF) thesupply of pork produced in the U.S. (SUS), the total supply of pork in theU.S. (ST), the foreign demand for U.S. pork (DF), the domestic demand for pork (DUS), and the total demand

for pork (DT) in the U.S.


24. At the market equilibrium price, how much pork will be imported from the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

25. At the market equilibrium price, how much pork will be consumed in the U.S.? A. Q1 B. Q2 C. Q3 D. Q4 E. Q5

26. At what price would pork imports equal pork exports? A. P1 B. P2 C. P3 D. P4 E. None of the above


EP5.5

Supply and Demand Review

1. The demand curve shows the relationship betweenA. consumer tastes and the quantity demanded.B. price and the quantity demanded.C. price and production costs.D. money income and quantity demanded.E. None of the above

2. If the U.S. wheat industry has an inelastic demand curve, a decrease in the amount of wheat supplied to the market would

A. have no effect on total revenues for wheat producers.B. increase the total revenues for wheat producers.C. decrease the total revenues for wheat producers.D. cause a sharp increase in the demand for wheat.E. None of the above

3. Which of the following is not a supply shifter for farm products?A. weatherB. new technologyC. government programsD. consumer incomeE. None of the above

4. The demand for food is usually considered an inelastic demand. This implies that for a given percentage change in price,

A. the percentage change in quantity demanded is less.B. the percentage change in quantity demanded is greater.C. the percentage change in quantity supplied is less.D. the percentage change in quantity supplied is more.E. None of the above

5. The demand for an item with many possible substitutes is _________ than the demand for an item with few substitutes.

A. more elasticB. less elasticC. lessD. moreE. None of the above

6. If the supply of a good is inelastic, a 10% change in the price of the good would produce a change in the quantity supplied of

A. 10%.B. more than 10%.C. less than 10%.D. 0%.


EP5.5

7. The law of supply states thatA. as a product price increases, a larger quantity will be consumed.B. as a product price increases, a smaller quantity will be consumed.C. as product price increases, a smaller quantity will be supplied.D. as product price decreases, a smaller quantity will be supplied.E. None of the above

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

A. The same quantity will be sold at the same price.B. An increased quantity will be sold at a lower price.C. An increased quantity will be sold at a higher price.D. An increased quantity will be sold at the same price.E. None of the above

9. Which of the following causes a shift in the demand for beef?A. A decrease in cattle numbersB. Increased cost of producing beefC. Increased number of cattle producersD. Increased income of consumersE. All of the above

10. If the price of a commodity increases by 10% and the quantity purchased decreases by 5%, then the demand for this commodity is

A. upward sloping.B. inelastic.C. elastic.D. unitary.E. unstable.

11. Which of the following would cause an increase in the price of an agricultural commodity?

A. An increase in supply and a decrease in demandB. A decrease in supply with no change in demandC. A decrease in demand with no change in supplyD. All of the above would cause price to increaseE. None of the above

12. If the price of a commodity is too high, the supply will be greater than the demand resulting in a

A. surplus.B. boycott.C. monopoly.D. shortage.E. None of the above


EP5.5



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

A. inelastic.B. elastic.C. unitary elastic.D. necessity.

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

A. unchanged, but more would be sold at a lower price.B. unchanged, but less would be sold at a higher price.C. shifted to the right.D. shifted to the left.

16. An increase in the supply of an agricultural commodity results in a shift of the supply curve

A. downward to the left.B. downward to the right.C. upward to the left.D. upward to the right.

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

A. demand.B. supply.C. market.D. utility.

18. The higher the price of milk, all other things being equal, the quantity consumed A. will increase.B. will decrease.C. will no change.D. cannot be predicted from the given information.

19. Relative to demand, most agricultural products tend to beA. inelastic.B. elastic.C. unitary.


EP5.5

20. The price received for an agricultural commodity is determined by which of the following?

A. Supply and unit elasticity.B. Customer desires and preference.C. Demand and family income.D. Quantity produced and the quantity consumed or purchased.

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

A. It stays the same.B. It becomes lower.C. It becomes higher.D. There is not sufficient information available to predict.

22. The equilibrium price of an agricultural product is the point whereA. demand and price are constant.B. production is stable at a given price.C. production (supply) is equal to consumption (demand).D. selling price equals purchasing price.

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

A. the demand schedule.B. the supply schedule.C. both the supply curve and the demand curve.D. both the demand schedule and the supply schedule.

24. ________________________ is how responsive the amount of an agricultural product produced or consumed would be to a change in price.

A. PriceB. ElasticityC. ConsumptionD. Supply

25. If the price of a commodity is too low, the demand will be greater than the supply resulting in a

A. surplus.B. boycott.C. monopoly.D. shortage.

26. The income elasticity of demand estimates the impact of a change in income on the demand for a good. For normal goods, the income elasticity of demand is

A. positive.B. negative.C. zero.


EP5.5

27. Economists use elasticities to relate the percentage change in one variable to the percentage change in another variable. The cross-price elasticity of demand estimates the impact on the demand for a good with respect to the change in the price of another good. A negative cross-price elasticity indicates the two goods are

A. substitutes.B. compliments.C. inferior.D. luxuries.E. None of the above

28. The own-price elasticity of supply estimates the impact on the quantity of a good supplied by a change in the price of the good. Normally, one would expect the own-price elasticity of supply to be

A. positive.B. negativeC. zero.D. None of the above

29. Economists use elasticities to relate the percentage change in one variable to the percentage change in another variable. The cross-price elasticity of demand estimates the impact on the demand of a good with respect to the change in the price of another good. A positive cross-price elasticity indicates the two goods are

A. substitutes.B. complements.C. inferior.D. luxuries.E. None of the above

30. The own-price elasticity of demand estimates the impact on the quantity of a good demanded by a change in the price of the good. Normally, one would expect the own-price elasticity of demand to be

A. positive.B. negative.C. zero.D. None of the above


EP5.5 KEY

Supply and Demand Review

1. The demand curve shows the relationship betweenA. consumer tastes and the quantity demanded.B. price and the quantity demanded.C. price and production costs.D. money income and quantity demanded.E. None of the above



3. Which of the following is not a supply shifter for farm products?A. weatherB. new technologyC. government programsD. consumer incomeE. None of the above


A. the percentage change in quantity demanded is less.B. the percentage change in quantity demanded is greater.C. the percentage change in quantity supplied is less.D. the percentage change in quantity supplied is more.E. None of the above


A. more elasticB. less elasticC. lessD. moreE. None of the above


A. 10%.B. more than 10%.C. less than 10%.D. 0%.


EP5.5 KEY

7. The law of supply states thatF. as a product price increases, a larger quantity will be consumed.G. as a product price increases, a smaller quantity will be consumed.H. as product price increases, a smaller quantity will be supplied.I. as product price decreases, a smaller quantity will be supplied.J. None of the above

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

A. The same quantity will be sold at the same price.B. An increased quantity will be sold at a lower price.C. An increased quantity will be sold at a higher price.D. An increased quantity will be sold at the same price.E. None of the above

9. Which of the following causes a shift in the demand for beef?A. A decrease in cattle numbersB. Increased cost of producing beefC. Increased number of cattle producersD. Increased income of consumersE. All of the above


A. upward sloping.B. inelastic.C. elastic.D. unitary.E. unstable.

11. Which of the following would cause an increase in the price of an agricultural commodity?

A. An increase in supply and a decrease in demandB. A decrease in supply with no change in demandC. A decrease in demand with no change in supplyD. All of the above would cause price to increaseE. None of the above


A. surplus.B. boycott.C. monopoly.D. shortage.E. None of the above


EP5.5 KEY




A. inelastic.B. elastic.C. unitary elastic.D. necessity.

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

A. unchanged, but more would be sold at a lower price.B. unchanged, but less would be sold at a higher price.C. shifted to the right.D. shifted to the left.

16. An increase in the supply of an agricultural commodity results in a shift of the supply curve

A. downward to the left.B. downward to the right.C. upward to the left.D. upward to the right.

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

A. demand.B. supply.C. market.D. utility.

18. The higher the price of milk, all other things being equal, the quantity consumed A. will increase.B. will decrease.C. will no change.D. cannot be predicted from the given information.

19. Relative to demand, most agricultural products tend to beA. inelasticB. elasticC. unitary


EP5.5 KEY

20. The price received for an agricultural commodity is determined by which of the following?

A. Supply and unit elasticityB. Customer desires and preferenceC. Demand and family incomeD. Quantity produced and the quantity consumed or purchased


A. It stays the same.B. It becomes lower.C. It becomes higher.D. There is not sufficient information available to predict.

22. The equilibrium price of an agricultural product is the point whereA. demand and price are constant.B. production is stable at a given price.C. production (supply) is equal to consumption (demand).D. selling price equals purchasing price.

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

A. the demand schedule.B. the supply schedule.C. both the supply curve and the demand curve.D. both the demand schedule and the supply schedule.

24. ________________________ is how responsive the amount of an agricultural product produced or consumed would be to a change in price.

A. PriceB. ElasticityC. ConsumptionD. Supply


A. surplus.B. boycott.C. monopoly.D. shortage.


A. positive.B. negative.C. zero.


EP5.5 KEY


A. substitutes.B. compliments.C. inferior.D. luxuries.E. None of the above


A. positive.B. negativeC. zero.D. None of the above

29. Economists use elasticities to relate the percentage change in one variable to the percentage change in another variable. The cross-price elasticity of demand estimates the impact on the demand of a good with respect to the change in the price of another good. A positive cross-price elasticity indicates the two goods are

A. substitutes.B. complements.C. inferior.D. luxuries.E. None of the above

30. The own-price elasticity of demand estimates the impact on the quantity of a good demanded by a change in the price of the good. Normally, one would expect the own-price elasticity of demand to be

A. positive.B. negative.C. zero.D. None of the above


EP5.6

Supply and Demand Experience

Let’s experience supply and demand firsthand! Over the next couple of days, our class will be creating surveys, conducting the completion of those surveys, graphing information, and forming conclusions on three of the principles pertaining to supply and demand below:

Law of Demand, Law of Supply, Demand Shifters, Demand Price Elasticity, Cross Price Elasticity, Income Elasticity of Demand

Steps in our Supply and Demand Experience1. Teachers will establish groups of three and assign each group three principles from

above.2. Groups will formulate a survey to gather information in proving the assigned principles.

This survey will be given to a small group of adults and should pertain to products familiar and readily available to the adult group. Surveys must have at least three questions each.

3. Conduct survey with adult group. Survey groups may be teachers, administrators, neighbors, community groups, etc.

4. Gather completed surveys and create a demand schedule, supply schedule, or chart/table to capture data.

5. Chart this information on a graph or calculate using the formulas discussed throughout the lesson (whichever is applicable).

6. INDIVIDUALLY, group members will create conclusions proving or disproving these principles, identifying type of elasticities, identifying types of products, making conclusions, etc.

7. Present these conclusions to the class and teacher through a PowerPoint presentation, displaying data, graphs, and any other pertinent information.

See the following page for the scoring rubric.


EP5.6

Supply and Demand Experience Scoring Guide

Topic: ________________________________________________________________________

Survey #1

Survey Questions

Survey has a minimum of 3 questions pertaining to

assigned principle.9 points

Survey has fewer than 3 questions and/or questions do

not pertain to assigned principle.

-3 points for every missing or incorrect question

Adult Survey GroupA minimum of 5 adults

completed survey.10 points

Fewer than 5 adults completed survey.

-2 points for every missing survey

Survey Data

Data is tabulated in an easy-to-read format using a table,

schedule, or chart.10 points

Data is not easy to read in a table, schedule, or chart

format.3 points

Data Calculations

Survey data has been converted to a graph or put

into an equation.10 points

Data Calculations

Survey data is CORRECTLY represented on the graph or

through equation calculations.20 points

Supply and Demand Conclusions

Conclusions are accurately based on supply and demand

knowledge, graphed data, and/or calculations.

30 points

Conclusions are not completely accurate.

-10 points for each incorrect conclusion

Presentations

PowerPoint presentations reveal the following: survey questions, general name of

adult group surveyed, survey data chart or table, data graph or calculations, and one slide

on the conclusion.25 points

PowerPoint presentations are missing one or more of the

following: survey questions, general name of adult group

surveyed, survey data chart or table, data graph or

calculations, and one slide on the conclusion.

-5 points for each missing piece

Survey #1 Total Points: ___________/114 points


EP5.6

Topic: ________________________________________________________________________

Survey #2

Survey Questions










Survey Data




format.3 points

Data Calculations



Data Calculations






30 points


-10 points for each incorrect conclusions

Presentations











EP5.6

Topic: ________________________________________________________________________

Survey #3

Survey Questions










Survey Data




format.3 points

Data Calculations



Data Calculations






30 points


-10 points for each incorrect conclusions

Presentations











EP5.6

Supply and Demand Experience Sample Survey Questions

Teachers: These are sample questions/topics students may use on the surveys to achieve the desired answers. This can be shared with groups, discussed as a class, or used as a teacher reference for discussion.

Law of DemandHow many times per month do you eat your favorite meal at your favorite restaurant?

If the price of your favorite meal increased in cost by $5, how many times per month would you eat that meal at your favorite restaurant?

If the price of your favorite meal decreased in cost by $5, how many times per month would you eat that meal at your favorite restaurant?

Demand ShiftersWhat are 3 factors that would make you eat your favorite meal at your favorite restaurant more times in one month?

What are 3 factors that would make you eat your favorite meal at your favorite restaurant fewer times in one month?

Demand Price ElasticityWhat beverage do you purchase from the grocery store most often in one month? Soda, bottle water, juice boxes, etc.Identify the specific brand you buy each time.How much of that brand do you buy each month?

If the price of that specific brand increased by $3 per case, how many would you buy?

If the price increased, would you buy a cheaper brand?

If the price of that specific brand decreased by $5 per case, how many would you buy?

If the price decreased, would you “stock up” on cases at the cheaper price?

Questions about cable, DISH, DirecTV

Questions about cell phones and cell phone plans

Cross Price ElasticityiPhone demand if app price increasesDemand for diesel pickups if diesel prices increase

Income Elasticity of DemandQuestions about vacations


EP5.7

Supply and Demand Alternative Evaluation

1. In the diagram shown below, the line which most closely represents a normal demand curve is line _______________________.

a. Ab. Bc. Cd. D

2. The price received for an agricultural commodity is determined by which of the following ______________________.

a. supply and unit elasticityb. customer desires and preferencesc. demand and family incomed. quantity produced and the quantity consumed or purchased

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

a. The same quantity will be sold at the same price.b. An increased quantity will be sold at a lower price.c. An increased quantity will be sold at the same price.d. An increased quantity will be sold at a higher price.

4. The higher the price of milk, all other things being equal, the quantity consumer _______________.

a. will increaseb. will decreasec. will not changed. cannot be predicted from information given

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

a. inelasticb. elasticc. unitary elasticd. necessity

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

a. unchanged, but more would be sold at a lower priceb. unchanged, but less would be sold at a higher pricec. shifted to the rightd. shifted to the left


EP5.7

7. An increase in the supply of an agricultural commodity results in a shift of the supply curve _________________________.

a. downward to the leftb. downward to the rightc. upward to the leftd. upward to the right

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

a. demandb. supplyc. market d. utility

9. Relative to demand, most basic agricultural products tend to be ____________________.a. inelasticb. elasticc. unitaryd. None of the above


a. It stays the same.b. It becomes lower.c. It becomes higher.d. There is not sufficient information available to predict.

11. ______________________ is how responsive the amount of an agricultural product produced or consumed would be to a change in price.

a. Priceb. Elasticityc. Consumptiond. Supply

12. As price of an agricultural product increases, the supply _________________________.a. decreasesb. equalizesc. increasesd. remains unchanged

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

a. A supply scheduleb. An elasticity schedulec. A quantity scheduled. A demand schedule


EP5.7

14. 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 ___________________________.

a. demandb. supply c. marketd. utility

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

a. demand and price are constantb. production is stable at a given placec. production (supply) is equal to consumption (demand)d. selling price equals purchasing price

16. The diagram shown below represents which of the following curves?a. A supply curveb. An equilibrium curvec. A demand curved. A unit elasticity curve

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

a. the demand scheduleb. the supply schedulec. both the supply curve and the demand curved. both the demand schedule and the demand curve

18. Which of the following causes a shift in the demand for beef?a. A decrease in cattle numbersb. Increased cost of producing beefc. Increased number of cattle producersd. Increased income of consumerse. All of the above

19. Which of the following is not a supply shifter for farm products?a. weatherb. new technologyc. government programsd. consumer incomee. None of the above


EP5.7


a. have no effect on total revenues for wheat producers.b. increase the total revenues for wheat producers.c. decrease the total revenues for wheat producers.d. cause a sharp increase in the demand for wheat.e. None of the above


a. the percentage change in quantity demanded is less.b. the percentage change in quantity demanded is greater.c. the percentage change in quantity supplied is less.d. the percentage change in quantity supplied is more.e. None of the above


a. more elasticb. less elasticc. lessd. moree. None of the above


a. 10%.b. more than 10%.c. less than 10%.d. 0%.e. None of the above


a. surplus.b. boycott.c. monopoly.d. shortage.e. None of the above


a. inelastic.b. elastic.c. unitary elastic.d. necessity.


EP5.7


a. surplus.b. boycott.c. monopoly.d. shortage.


a. positive.b. negative.c. zero.d. None of the above


a. substitutes.b. compliments.c. inferior.d. luxuries.e. None of the above


a. positive.b. negativec. zero.d. None of the above


a. upward slopingb. inelasticc. elasticd. unitarye. unstable


Documents

Economic Principles in Agribusiness: Supply and Demand Supply and... · Web viewQuestions about cell phones and cell phone plans Cross Price Elasticity iPhone demand if app price