agriculture and fish handout

1. Question 1
A movement along a demand curve means?
a. A change in price c. A change in demand
a. A change in quantity d. A change in quantity
demanded
d. A change in quantity
demanded
This question requires an understanding of Demand
Discussion Review:
Pricing is an integral part of marketing. The heart of
price formation under pure competition, is demand and
supply analysis.

2. Without analysis of demand and supply, we cannot
understand how prices are determined.
Demand, the powerful force that “pulls” food products
through the marketing channels. It is defined as the various
quantities of a product which consumers will buy at all
probable prices, all other factor affecting demand held
constant.
Effective demand, consist of both a desire for the product
and the ability to pay for it.
The demand relation can be described in two ways: as a table
of prices and a graph or algebraic functions of price and
quantities ( a demand curve).

3. Demand Schedule
Price per Kg. Qty.
Demanded
5 8
4 13
3 20
2 30
1 45
Demand Curve
Price
Qty. Demanded

4. Change in Quantity Demanded
0
5
10
15
20
25
30
35
40
45
0 5 10 15
Price
Quantity Demanded
Demand for rice
Demand for rice
Price per kg. Qty. Demanded (kg)
Q1 29 10
Q2 31 8
Q3 33 6
Q4 35 4
Q5 37 2
Q6 39 0
Price and quantity
demanded is inversely
related to each other.
Law of Demand
Change in Quantity
demanded is a change
along the demand curve.

5. Question 2
The effect of a price change is always negative as consumers
tend to substitute other goods resulting to a decrease in
quantity demanded?
a. Substitute effect c. Giffen paradox
b. Income effect d. Inferior good
a. Substitution Effect
Discussion Review
If the price of chicken declines relative to pork,
consumers tend to substitute chicken for pork. Consumer
tends to substitute the relatively cheaper commodity for the
more expensive one to remain at the highest possible level of
utility within the constraint of available income.

6. What is Substitution Effect in relation to change in demand?
Price
Quantity
Qd2
Qd1
Change in Demand is a
movement of the whole demand
curve either downward (left
side) or upward (rightward)
movement.
Downward movement means
decrease (negative) in demand
and Upward movement means
increase (positive) in demand.
P1
P2
Qd
P Downward movement
DEMAND FOR PORK

7. DEMAND FOR CHICKEN
Price
Quantity
Qd2
Qd1
P2
P1
Upward movement
Qd
P

8. Question 3
Other things being equal, an increase in the per capita
income of consumers will result in?
a. A change in quantity demanded c. A change in demand
b. An increase in demand d. A decrease in demand
b. An increase in demand
Discussion Review
Demand increases as the income of the consumers
increases, prices remaining constant. (Demand and income is
positive).

9. Qd1 Qd2
P1
P2
INCOME EFFECT
Price increase causes to
reduce the value of the
consumers income.
Price increases
Quantity demanded
increases

10. Change in Demand
Change in Demand is a change in an entire demand curve.
What causes the change in demand?
As population increases,
the demand for product
also increases.(Positive).
As population decreases
the demand for products
also decreases.
As income increases,
assuming prices remain
stable, the demand for
luxurious goods (like steak)
may increase while
demand for inferior goods
(ginamos) decrease.
(Positive/ Negative).
1 2

11. 3 Substitute (Negative)
Complement (Positive)
What is MARKET DEMAND?
Market Demand is defined as the quantities of a commodity
which all consumers in a particular market are willing and
able to buy as price varies, all other factors are held constant.
A market demand relation can be thought of as summation
of individual demand relations.
DEMAND Shifters

12. Question 4
If the elasticity of demand is less than 1, an increase in own
price of a commodity will result in?
a. An increase in revenue c. A decrease in total revenue
b. No change in total revenue d. A decrease in the value of
the elasticity of demand
a. An increase in revenue
Discussion Review
Reactions of consumers to changes in the price of a
particular commodity may either be a decrease in purchase if
prices increase or an increase in purchases as prices decrease.
But the extent to which this occurs varies widely from product
to product.

13. The extent to which purchases change in response to
price changes is referred to as price elasticity of demand.
Price elasticity of demand
E = % change in quantity
% change in price
0 = Perfectly inelastic
more than 0 less than 1 = Inelastic
1 = Unitary elastic
more than 1 to infinity = elastic
Infinity = perfectly elastic

14. A drop in price causes consumers to make larger
money expenditure on a commodity whose demand is elastic,
If demand is inelastic, a fall in price causes consumers to
spend less money on the commodity.
Commodity Income Elasticity
Rice 0.08
Corn 0.17
Pork 0.74
Beef 0.74
Processed Meat 0.96
Chicken 0.6
Vegetables 0.16
Root Crops 0.21
Fresh Fruits 0.25

15. When the price of papaya increase by 30 %, quantity
demanded decrease by 2 %. What is the absolute value of
the elasticity of demand?
When the price of palay increases, total revenue of the
farmer also increase, From this, we can correctly conclude
that the demand for palay is?
a. Perfectly inelastic c. Unitary elastic
b. Elastic d. Inelastic
d. Inelastic
Question 6
Question 5
a. 2 c. 30
b. 1.5 d. 0.07
d. 0.07 = (2/30=0.0667

16. Question 7
Under what condition will demand be likely elastic?
a. Newly marketed product c. A product has many uses
b. Perishable product d. All of the above
c. A product has many uses
Question 8
The supply curve for a given commodity will shift to the right
if?
a. Competing or alternative commodities become more
profitable
b. A technological improvement results in a decrease in per
unit cost
c. The cost of producing the commodity increases.
d. All of the above
b. A technological improvement results in a decrease in per
unit cost

17. Question 9
Improvement in production technology, given a constant
demand, will result in?
a. Increase in supply and subsequently lower price of the
product.
b. Increase in supply without any change in the price of the
product.
c. Increase in supply and an increase in the price of the
product.
d. All of the above
a. Increase in supply and subsequently lower price of the
product.

18. Discussion Review
Supply is quantity offered for sale is made to depend
on price, other variables can affect quantity held constant.
Supply is represented either in supply schedule or
graphical presentation.
A normal supply function should slope upward and to
the right. Producers presumably are willing to offer larger
quantities as the prices rises.
Price
Quantity
P2
Qd1 Qd2
P1
Change in quantity supplied.
Is a change of quantity
supply along the supply
curve.

19. Change in Supply DOWNWARD MOVEMENT
(RIGHTWARD);
Dec. In Price
Inc. In Qty Supplied
Change in Supply
UPWARD / LEFTWARD
MOVEMENT
Inc. In Price
Inc. In Qty Supplied

20. Supply Shifters
A. Changes in prices of resource inputs (-)
> An increase in input prices, decreases supply
Downward movement
B. Changes in Technology (+)
> An improvement of technology, increase supply
Upward movement
C. Sellers expectations of future prices (+)
Upward movement

21. D. Prices of closely related commodities. (-). E.g Corn &
Hog / Profitability of competing commodities (+) Rice
& Corn
Upward movement/ Downward Movement
Question 10
That price at which the quantity per unit of time that buyers
want is just equal to the quantity that sellers want to sell?
a. Equilibrium price c. Selling Price
b. Buying Price d. None of the above
a. Equilibrium price

22. Price Demand Supply
2 4 3
4 7 4
5 5 5
6 3 8