Week 5_impact of supply and demand shift

Week 5_impact of - Department of Food and Resource Economics LESE204 Impacts of supply and demand shifts Department of Food and Resource Economics

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LESE204 Department of Food and Resource Economics Impacts of supply and demand shifts
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LESE204 Department of Food and Resource Economics 1. Impacts of Supply shift P Q D Elastic Demand P Q D Inelastic demand Same size of shift S S’ S S’
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LESE204 Department of Food and Resource Economics 2. Impacts of Demand shift P Q D Elastic Supply P Q D Inelastic demand Same size of shift D’ D D’ S S
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LESE204 Department of Food and Resource Economics 3. Impacts of Supply and Demand shifts P Q D Pork Market P Q Beef Market D D’ S S Source: Norwood and Lusk, Ch 3. Environmental regulation on pork producers S’ e p e p e p ’’ e b e b Partial equilibrium: e p e p General equilibrium: e p e p ’’ in pork market, e b e b ’ in beef market
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LESE204 Department of Food and Resource Economics Supply in a competitive market
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LESE204 Department of Food and Resource Economics Assumptions and implications Assumptions - Many buyers and sellers. - Product is homogeneous (identical). - Perfect information is provided - No transaction costs. -Free entry and exit. Implications Firms (suppliers) are price takers i i i i a i FC Q C Q P ) ( ) ( i i a Q mc P
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LESE204 Department of Food and Resource Economics Representative firm’s decision $ Q AC AVC MC Pa = MR Q * AC Pa Profit = (P - AC) Q * operating loss / profit determining the short-run supply
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LESE204 Department of Food and Resource Economics Imperfect competition
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LESE204 Department of Food and Resource Economics 1. Addressing the issues Market? - Single supplier & numerous consumers - A few suppliers & numerous consumers - Numerous suppliers & single buyer - Numerous suppliers & a few buyers - Single supplier & single buyer - A few suppliers & A few buyers The extent of competition is a key point Sellers Buyers Competition among sellers Competition among buyers Competition The competition generally depends on the number of sellers or buyers
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LESE204 Department of Food and Resource Economics 1. Addressing the issues - Competition among players and channels Farmers Wholesalers Food company Retailers Super chains Big Marts Food company Middle men (Wholesalers) Big Marts assemblers assemblers Retailers C O N S U M E R S Farmers Farmers Farmers Farmers Farmers Farmers Farmers cooperatives There also exist competition among players at a same stage of marketing channel. (Pfa > ? < Pfc ) Competition among channels exist . (Pf1 > ? < Pf2 / Pr1 > ? < Pr2 ) Retailers Pf1 Pr1 Pf2 Pr2 Pfa Pfc C O M P E T I T I O N C O M P E T I T I O N
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LESE204 Department of Food and Resource Economics 1. Addressing the issues Definition of marketing
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This note was uploaded on 03/25/2012 for the course MAR 3023 taught by Professor Lutz during the Fall '08 term at University of Florida.

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Week 5_impact of - Department of Food and Resource Economics LESE204 Impacts of supply and demand shifts Department of Food and Resource Economics

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