What happens to the price of a agricultural product when demand exceeds supply?

JAMB Agricultural Science 2023 262 views
Source: JAMB · 2023

What happens to the price of a agricultural product when demand exceeds supply?

  1. The price increases ✓
  2. The price decreases
  3. The price remains unchanged
  4. The price fluctuates randomly
Explanation

When demand exceeds supply, prices rise. Many buyers competing for limited products bid prices up – basic economics of scarcity.

In agriculture: dry season vegetable scarcity raises prices; abundant harvest lowers them. Understanding this helps farmers time production and sales.

Price signals guide production decisions – high prices encourage more planting; low prices discourage it.

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