Industry, in general, is taken to be categorized into three types, which are the agricultural industry, the commercial industry, and the manufacturing industry. The highlight of this paper focuses on the first of the three, which is the agricultural industry.
More specifically, the impact of shifts and price elasticity of supply and demand, positive and negative externalities, wage inequality, and monetary and fiscal policies are investigated in order to make a holistic assessment of the level of success that the industry has achieved and the economic influences that has affected it in a negative way.
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The agriculture industry is among the three categories that deal with the acquisition of resources from land and water that provide the necessities in life (Jackson, 1841). Likewise, it serves as the source from which raw materials could be taken and are subsequently passed on to the manufacturing industry for processing (Jackson, 1841).
It could be remembered that the manufacturing industry is among the three industries that form an important part of the economy. It is considered to have an impact both in direct and indirect terms in achieving economic growth and the reasons behind this is two-fold (Faruqee, 1999).
First, both the linkages in farm inputs, which includes equipment, fertilizers, and chemicals, and processing of food and fiber is considered as strong (Faruqee, 1999). Second, any increase in the income derived from the agriculture industry is also spent on locally-produced goods and services (Faruquee, 1999).
An important economic aspect is that of the element of labor which is also present in this particular industry. It is important to take note of this because of the important role it plays in the growth and success in achieving the intended purpose expected from the society.
Labor, in this particular sector, is further categorized into three, which is composed of those whose task involve the collection of the products from “the land and water, animal, vegetable, and mineral”; those who preserve, augment, and process these products; and those who are associated with the production of agricultural tools and infrastructure (Jackson, 1841).
Taking this into consideration, the agricultural industry is affected in such a way that overproduction or underproduction in relation to the consumption of people have to be weighed carefully in order for the commodities to be sold at a competitive price in the market. Likewise, the following shifts in the curves would help in determining the market price for the produce.
However, an important aspect, which is referred to as elasticity, should be related to this as there are important impacts that it has over the equilibrium price and quantity in relation to the shifts in demand and supply curves.
In situations where there is a shift in the demand for a good that has a greater value of elasticity in terms of supply, the change in equilibrium quantity is larger and the change in equilibrium price is smaller (Lipsey & Harbury, 1992).
On the other hand, the shift in the demand does not have impact on the equilibrium market price should the supply of the good being considered is perfectly elastic and there is no effect on equilibrium quantity should the supply be perfectly inelastic (Lipsey & Harbury, 1992).
As for the supply curve, the shift in the supply leads to a larger change in the equilibrium quantity and a lower degree of change in the equilibrium price if the elasticity of demand is greater (Lipsey & Harbury, 1992).
For goods with a perfectly elastic demand, the shift in supply has no corresponding impact on the equilibrium market price and there is no effect for the equilibrium quantity if the demand for the good is perfectly inelastic (Lipsey & Harbury, 1992).
The consideration of the shifts in both the supply and demand curve together with that of the elasticity in terms of supply and demand of the good is particularly of great help in making decisions in terms of the planning for the industry regarding the production of the goods and consumption especially in areas where there is hunger.
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