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In today’s Agricultural Science class, We will be learning about Basic Economic Principles in Agriculture. We hope you enjoy the class!
- Basic economic concepts
- Principle of demand and supply
- Effects of demand and supply
- Law of diminishing return
BASIC ECONOMIC CONCEPTS
The following economic concept explains the behaviour of consumers of agricultural goods. These concepts or elements include
- Wants: this is the desire or needs of man to own goods and services that give satisfaction. These wants are insatiable because the resources needed to cater to them are limited (in short supply). The basic need or wants of man are food, clothing and shelter.
- Scarcity: this refers to the limited supply of resources needed to meet (satisfy) wants.
- Choice: this is the system employed in selecting one need to satisfy out of a number of alternatives.
- Scale of preference: is a list of unsatisfied wants in order of importance. This is relative to the individual
- Opportunity cost: is the satisfaction of one want or need at the expense of another. It is expressed in terms of the value or worth of forgone alternative. It is also referred to as the true or real cost while money cost is the amount spent in order to acquire a particular good or service.
PRINCIPLES OF DEMAND AND SUPPLY
Demand: Demand may be defined as the quality of goods a consumer is willing and ready to buy at a given price over a given period of time. Demand is effective when the willingness to buy is backed with the ability to pay.
LAW OF DEMAND
The law of demand states that the higher the price, the lower the quantity of goods that will be demanded or the lower the price, the higher the quantity of goods that will be demanded.
This is a table showing the relationship between the price and quantity of that commodity demanded. This table below obeys the law of demand.
|Quantity Demanded (kg)
Demand Curve is a graph showing the relationship between the price and quantity of that commodity demanded. This curve derived from the demand schedule.
FACTORS AFFECTING DEMAND
- Price of good
- The price of other commodities
- The income of the consumer
- Changes in the taste of the consumer
- Periods of festivals
- The expectation of changes in prices
- What is demand?
- List five factors affecting demand
We have come to the end of this class. We do hope you enjoyed the class?
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In our next class, we will be learning about the Principles of Demand and Supply. We are very much eager to meet you there.
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