AGEC 314 Exam 3 Work.docx - Chapter 8 Question 3...

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Chapter 8; Question 3: Agricultural economists for the most part accept the definition of quality as the “sum of the attributes of a product that influence its acceptability to many buyers and thus the price they are willing to pay for it”. Why would a product’s quality be appraised differently by two different people? Distinguish between homogenous and heterogenous demand for quality. How can the quality-price relationship alter one’s view of quality? Products quality can be appraised differently by two different people base upon field or study, like how an economist’s grades could vary form a farmers. However, consumer expectations about that perceived quality can either be in uniform across consumers or vary amongst different types of consumers. A products quality can be appraised differently by two different people based upon consumer preferences, for example, some consumers believe in the superior quality of whole milk as it delivers more calories and fat, but some consumers prefer the 2% fat quality milk for its reduction in fat. This varying preference on demand in a market is considered to be heterogenous demand for quality, because consumers believe a couple of different quality’s to be superior to the others. On the other hand, when mostly all the consumers in a market consider a specific grade to be the higher demanded quality for this specific commodity, then the demand for quality is said to be homogenous in nature. Additionally, higher quality products have a positive relationship with price, as both increase in response to an increase in the other. This can lead to consumers view on quality to be associated with a higher price over time, rather that is case of not for the respective commodity. While higher quality commodities do bring about a higher price, other factors such as branding can lead to a false view of the quality-price relationship. “An Aggie does not lie, cheat or steal or tolerate those who do.” “On my honor, as an Aggie, I have neither given nor received unauthorized aid on this academic work.”
Dylan Pouncy 726000340 11/26/2019

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