Question

60 MARKS] SECTION B Answer ANY THREE (3) questions in this section. QUESTION 3 (20 Marks) 3.1 The minister of Agriculture, Forestry and Fisheries has decided to supply fertilisers to strawberry farmers at no cost. With the aid of a well labelled diagram, explain the effect of this (ceteris paribus) in the market for strawberries (6 marks) 3.2 In 3.1 above, at the same time the minister decided to supply the fertilisers, the World Health Organisation (WHO) publishes a report showing the immense health benefits of eating strawberries. With the aid of a well labelled diagram explain the effects on the equilibrium price and quantity of strawberries. (6 marks) 3.3 Briefly explain ANY FOUR (4) determinants of supply for the agricultural sector in your country. (8 marks) QUESTION 4 20 Marks)

the minister of agriculture has decided to supply fertilizers to strawberry farmer's at no cost. with the aid of well labelled diagram explain the effect of this(get rid paribus) in the market for strawberries.

Answer 1

3.1) When the MINISTER OF AGRICULTURE gives the fertilizers for free, the cultivation of strawberries will rise, this will lead to an increase in the SUPPLY of strawberries. But the demand for strawberries still remains the same and unchanged. In the diagram, we see that the Supply curve S1 shifts RIGHT to S2 showing an increase in the supply of strawberries with demand remaining constant at D1. When there is a constant demand combined with an increase in supply, the price of strawberries DECREASES from P1 to P2 and due to lower prices in the market, the Quantity Demanded increase from Q1 to Q2.

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3.2) If the World Health Organisation says that there are immense health benefits of eating strawberries, the DEMAND for strawberries will increase and demand curve will shift right from D1 to D2, thus increasing the quantity demanded of strawberries from Q2 to Q3. With this increase in demand for strawberries, the price of strawberries starts increasing and goes to its original level P1 from P2.

3.3) The four determinants of supply of Agriculture are:

a) Infrastructure development such as Roads and Irrigation Facility: With a better irrigation facility and availability of water, the yield in Agriculture is high thus increasing the supply of the crop being cultivated.

b) Availability of Markets: When there is a large availability of markets for consumption, the agricultural yield gets a good price and thus gets more developed with time. Hence the supply is also affected by the availability of demand and a good market.

c) Climate: Certain types of crops grow in a certain climatic condition. Therefore, agriculture in a particular place always depends on the climatic conditions of that place. Better the climate, better would be the supply.

d) Technology: The scientific methods used in Irrigation always lead to higher yields. When the types of equipment used are of high standards, the yield and output are very high. Similarly, scientific types of seeds generate higher yields. This increases supply.