Oct 26 Primary and Derived Supply and Demand

Oct 26 Primary and Derived Supply and Demand - Derived and...

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Unformatted text preview: Derived and Primary Supply and Demand (10/26/10) AEC 305, Food and Agricultural Marketing Principles AEC 305, Food and Agricultural Marketing Principles Today: Chapter 6 Schrimper and applicable sections of the Dr. Browns lecture notes Thursday (10/28/10) Journals due Exam II Review Next Tuesday (11/2/10) Exam II Demand and Supply at Different Levels in the Marketing Chain The demand schedule that we have discussed has really been the one at the consumer (retail) level primary demand The supply schedule that we have discussed has really been the one at the producer (farm) level primary supply How does one determine the equilibrium price and quantity at the producer (farm) level and at the consumer (retail) level? AEC 305, Food and Agricultural Marketing Principles AEC 305, Food and Agricultural Marketing Principles Demand and Supply at Different Levels in the Marketing Chain In reality. One has to take into account supply and demand at the consumer (retail) level to get the consumer (retail) quantity and consumer (retail) price level and One has to take into account supply and demand at the producer (farm) level to get the producer (farm) quantity and producer (farm) price level The difference between the two levels represents the cost of marketing (i.e. moving the product from the farm to the consumer measure of the marketing margin AEC 305, Food and Agricultural Marketing Principles AEC 305, Food and Agricultural Marketing Principles Assumptions Fixed proportions (e.g. eggs, fruits, vegetables vs livestock/processed products where conversion factors must be known) Marketing input prices remain constant for a range of quantities (i.e., perfectly elastic supply of marketing inputs) Competitive Market Conditions AEC 305, Food and Agricultural Marketing Principles AEC 305, Food and Agricultural Marketing Principles Derived Demand vs Primary Demand The derived (farm-level) demand is derived from the primary (consumer or retail) demand....
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Oct 26 Primary and Derived Supply and Demand - Derived and...

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