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Research Bulletin (Iowa Agriculture and Home Economics Experiment Station)

Abstract

Physical conditions of production are the foundation of product supply and factor demand in agriculture. This study is the first of its type to relate technology, as expressed in production functions estimated from experimental data, to the market phenomena of price determination-demand and supply. The main objective is to examine the nature of corn supply and fertilizer demand functions for a within-season period. That is, the functions specify the yield conponent of supply elasticity, or the supply elasticity assuming com acreage is fixed and fertilizer is the variable resource.

Because this report is an initial effort and because available empirical data are few, the major emphasis throughout the report is on methodology.

The approach is normative since the functions indicate what the supply and demand would be based on production functions derived from fertilizer experiments if farmers maximized profits under conditions where capital, institutional and behavioral restraints are unimportant. Such normative concepts are referred to simply as "static supply" and "static demand."

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