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AEC_305_Final_Exam - AEC 305 Final Exam(Fall 2004 NAME 1 a...

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AEC 305 Final Exam (Fall 2004) NAME ______________________________________________ 1. a. Briefly describe the difference between price discovery and price determination. (4 points) b. Briefly discuss the difference between a production contract and a marketing contract. (4 points) c. Identify two reasons why agribusinesses have been motivated in recent years to enter into production contracts with farmers. (4 points) d. Identify one potential benefit for farmers for entering into production contracts with agribusinesses AND one potential concern for farmers. (4 points) 2. Briefly discuss the difference between the following marketing concepts. (4 points each) a. primary vs. derived demand b. marketing margin vs. marketing bill c. nominal vs. real prices
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3. Suppose the following equations represent demand and supply of a given agricultural commodity in two regions of a country, Region A: Demand: Q = 30-2P Supply: Q = 15 +3P Region B: Demand: Q = 90-8P Supply: Q = 30+2P where Q and P represent quantity and price, respectively for each region. a. What would be the market clearing prices and quantities in each region if NO trade between the two regions occurred? Show all your calculations. (3 points) b.
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