Illustrates all quantities supplied at every alternative price.
Describes the marginal cost of the last produced unit.
Upward sloping (Law of Supply). For a normal good, as
price increases, the quanti
Chapter 7: Inter-regional Trade
Lets consider two regions in which there are production and
consumption of barley.
However, in region A, the resources for producing barley are low and
the costs of production are high. Conversely, in region
When is profitable to trade if transportation costs exist?
Without transportation costs, it makes sense to trade if |PA
PB| > 0. In other words, when the difference in prices between
two regions exceeds zero, then it would be profitable to
purchase a g
Regional Trade Agreements
Currently, there are a number of regional trade agreements that exist.
Along with those, there are trade agreements for commodities on a
country-by-country basis. Here are some examples:
NAFTA (North American Free Trade Agreeme
Chapter 8:International Trade
International trade is an enormous part of U.S. agriculture. The U.S.
is a major exporter of
many commodities that are crucial the U.S. economy and the
economies of other nations.
For example, the U.S. is one
Producer surplus and Producer cost
Producer cost (PC) is the total cost that is incurred by the supplier for
making and selling a certain number of goods. It is measured as the
area below the supply curve, bounded by the quantity supplied.
Understanding the food marketing channel Derived Demand
Agricultural production is unique! One of the ways that it is unique is
that many agricultural commodities are produced in equal proportions
from some raw input.
Cattle Hamburger meat Steaks
Deriving the excess supply curve
Properties of Deriving Excess Supply
At autarky prices, no additional (excess) supply exists.
When prices are higher than autarky prices, than:
Domestic producers are willing to produce more (they
receive a higher pric
Illustrates all quantities desired at every alternative price.
Describes the marginal value of the last consumed unit.
Downward sloping (Law of Demand)
For a normal good, as price increases, the quan
Chapter 9: Exchange Rates in International Trade
We have seen that international trade can increase social welfare.
When discussing international trade, we assume that there is a
simple transaction: the producer provides a commodity and the