Theory question 109
Basic Agricultural Economics(a) Distinguish between the terms loan and subsidy as used in agricultural financing.
(b)(i) Define the term supply. (ii) Use the information in the supply schedule below to draw a supply curve.
Price of Cocoa (Le): 10,000; 15,000; 20,000; 25,000; 30,000
Supply of Cocoa (tonne): 450; 550; 700; 1,000; 1,700
(iii) Use the supply curve drawn to explain the relationship between supply and price.
(c) State two advantages and two disadvantages of using farm and home visits as a teaching method in agricultural extension work.
(d) Mention three characteristics of agricultural produce in relation to marketing.
Show the model answer
(a) A loan is money lent to a farmer that must be repaid, usually with interest; a subsidy is part of the cost of inputs or services paid by government, which the farmer does not repay.
(b)(i) Supply is the quantity of a commodity that producers are willing and able to offer for sale at a given price and time.
(ii) Plot price (Le) on the vertical axis and quantity supplied (tonnes) on the horizontal axis with a suitable scale and title; plot the five points (450, 10,000), (550, 15,000), (700, 20,000), (1,000, 25,000), (1,700, 30,000) and join them with a smooth curve sloping upward from left to right.
(iii) Supply rises as price rises (direct/positive relationship): the higher the price of cocoa, the more is supplied, and vice versa.
(c) Advantages: personal contact builds trust; problems specific to the farmer are solved; farmer learns on his own farm; good for adoption of new ideas. Disadvantages: reaches few farmers; time-consuming and costly; needs many extension workers and transport.
(d) Any three: perishable; bulky; seasonal; variable in quality/not uniform; produced in small quantities by many scattered farmers; demand is fairly inelastic.
The supply curve must slope upward; label both axes with units.