Biology Forums - Study Force

Article Summary

According to the Department of Agriculture, net farm income will fall from $91.1 billion in 2014 to $58.3 billion in 2015, a 36 percent drop and the largest percentage decline since 1983.  Falling prices on corn and soybeans are responsible for a portion of the decline in income, as are lower prices for dairy products, hogs, and chickens. The USDA is, however, predicting lower production costs due to falling prices for energy, seed, fertilizer, and pesticides.

Source: Jesse Newman, "U.S. Farm Income to Fall to Lowest Level in Nine Years," Wall Street Journal, August 25, 2015.

Refer to the Article Summary above. All else equal, the lower production costs should help offset some of the falling income and

prevent losses from occurring in the agricultural sector.

keep profits from falling to an even lower level.

reduce the equilibrium quantity of agricultural output.

keep prices from falling to an even lower level.

Article Summary

According to the Department of Agriculture, net farm income will fall from $91.1 billion in 2014 to $58.3 billion in 2015, a 36 percent drop and the largest percentage decline since 1983.  Falling prices on corn and soybeans are responsible for a portion of the decline in income, as are lower prices for dairy products, hogs, and chickens. The USDA is, however, predicting lower production costs due to falling prices for energy, seed, fertilizer, and pesticides.

Source: Jesse Newman, "U.S. Farm Income to Fall to Lowest Level in Nine Years," Wall Street Journal, August 25, 2015.

Refer to the Article Summary above. Assume that after the record decline in U.S. farm income in 2015, farmers are expected to break even in 2016. This means that at the quantity being produced in 2016

AVC  = ATC.

MR = ATC.

MR = MC.

MC = AVC.

MR = ATC.