Agricultural Science (AS)·Agricultural economics & extension · NSSCAS 6.1
Basic economic principles: demand, supply & elasticity
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A tomato farmer near Stampriet has a field, a little money, and a lorry-load of ripe tomatoes ready for market. What price will she actually get, and is growing tomatoes even the wisest use of her land? In this lesson we build the demand and supply graph that sets every price, learn why farm prices swing so sharply, see how the government can steady them, and follow the farmer as she weighs opportunity cost and hunts for the capital to farm at all.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Agricultural Science (AS) 6.1):
- Draw and interpret a simple demand and supply curve for a named farming enterprise, showing the equilibrium price and quantity
- Explain the law of demand (a downward curve) and the law of supply (an upward curve)
- Describe the elasticity of demand and supply using diagrams, and explain why many farm products are price-inelastic
- Describe how the price of agricultural products may be regulated, including grading/quality specification, minimum (floor) prices, maximum prices and marketing boards
- Discuss the implications of price regulation in agriculture, including protection, surpluses, shortages and distortion
- Explain, using examples, opportunity cost in relation to agricultural decisions
- Identify the main sources of farm capital, including own savings, Agribank, commercial banks, cooperatives, government grants and credit suppliers
- Discuss the problems associated with different sources of capital
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Miss Elina and Mike talk through the whole topic — with the figure and working drawn live.