Factors Affecting Food Supply

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1.0 Introduction Demand Economists have a very precise definition of demand. For them demand is the relationship between the quantity of a good or service consumers will purchase and the price charged for that good. More precisely and formally the Economics Glossary defines demand as the want or desire to possess a good or service with the necessary goods, services, or financial instruments necessary to make a legal transaction for those goods or services. Law of demand stated that he higher the price, the lower the quantity demanded. Supply Supply is the number of some product manufacturers is willing to sell at an agreed price all other aspects being held constant. Usually, supply is plotted as a supply curve show the relationship of…show more content…
Trying to know the general effect of environment changes on our food supply can be tough. Rises in carbon dioxide (CO2) and temperature can be useful for some yields in some places. But to realize these benefits, water availability, soil moisture, nutrient levels and other conditions must also be encountered. Changes in the severity and frequency of floods and droughts could pose challenges for farmers. Environment change may upsurge the prevalence of illnesses and parasites that affect livestock. 1.2.2 Increase in Price of Inputs Input prices are the expenses of the reasons required to produce the good. Rent, labor, materials, costs are all input expenses. If input prices rise, supply will fall because it is more expensive for a given firm to supply the same quantity of goods. Therefore, if the price of inputs to produce food increase, the quantity of food produced will decreases. 1.2.3 The Activities of Speculators There are two problems with food speculation. First, when speculators control the market, the prices that are paid for real, physical merchandises (‘spot markets’ where speculators bought and sold) are not rely on supply and demand anymore. They are instead relying on the prices of the upcoming…show more content…
Price elasticity of demand shows that connection between changes in the quantity demanded of a certain good and a change in its price. The elasticity of demand usually will be less than 1 to show inelasticity. 2.1 Elasticity Usually, an elastic variable is one which reacts a lot to a little change in further factors. In more official terms, it is the percentage change in another variable to the ratio of the percentage change in one variable. It is a technique for calculating the responsiveness of a function to changes in parameters in a unit less way. Frequently used elasticity’s include price elasticity of demand, income elasticity of demand, price elasticity of supply, elasticity of intertemporal substitution and elasticity of substitution between factors of production. 2.2 Inelastic Demand Inelastic demand is a condition in which a large percentage change in the price will only affect the quantity demand by a small percentage. For example, 10% increase in the price of food will lead to decrease 2% in the quantity demand for it. Goods with low substitutes such as food have inelastic

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