Tuesday, February 5, 2013

Agricultural Supply

One of the decisions that suppliers who produce multiple goods must face is how much of each good to produce. In making this decision, the role of expected prices for the goods comes in part into play in making this decision. Agricultural producers are an excellent example of this and the impact these decisions have on the supply of agricultural products. The New York Times reports that recent rises in cotton prices is resulting in agricultural producers increasing the supply of cotton and thus decreases in the supply of other agricultural products. This is an excellent example of how price expectations of alternative goods is impacting the "supply curve".

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