MICRO ECONOMIS

Final Project

Instructor: Shanza Khalid

Farmers market

Farmers market is a physical retail marketplace intended to sell foods directly

by farmers to consumers. Farmers' markets are both indoors or outdoors and typically
consist of stands or tables where farmers sell their plants, productsand sometime
beverages and prepared food. Farmers' markets exist in every country worldwide and it
reflects the economy and local culture. The size of the market may be just a few stalls or
it may be as large as several city blocks. Due to these markets’ nature, they tend to be less
rigidly regulated than retail produce shops.
Consumers interact with each other and vendors on a social level at farmers' markets. Some
consumer social interactions, such as enjoying the market, talking with farmers about seasonal
products and making a trip to the market a family event, are significant and positive
influences on spending at farmers' markets.
The government protects farmers against fluctuations in prices, revenues, and yields. It
subsidizes their conservation efforts, insurance coverage, marketing, export sales,
research, and other activities. Federal aid for crop farmers is deep and comprehensive.

Farmers markets are important for many reasons. 

 Farmers markets are the critical component in rebuilding local food economies.

 Farmers markets are cost-effective for farmers because they provide brief periods of
intense retail sales with low fixed costs.  Unlike grocery stores or public markets,
farmers markets ask their customers to come at the same time
 
 Farmers markets can be community-building, community-defining and community-
sustaining institutions.  They can provide opportunities for citizen involvement in
food policy issues.
Describe in detail the characteristics of the consumers in the market.

The characteristics of consumers in the farmers market vary from a person to person on the basis
of personal factors and these personal factors are the following:

 Age
 Economic circumstances
 Life-style

Characteristics of consumers
1. Someof the consumers visit the whole market and then buy some products and others just go
to a Shopkeeper and buy all the stuff from one shop
2. There are many consumers who compare the rates of the products in market and then make a
purchase.
3. All the consumers care about the neat and healthy environment of the shop in Farmers
Market.
4. People in the Farmers Market are interested in new market products.
5. In farmers market everything is usable and healthy for the consumers so the byers do not
waste their much time in visiting the whole market.
6. Some people compare the different products to find the best value for money.

What does demand look like? Is it elastic or inelastic?

The Demand for most of the farm products is inelastic. The reason for this is that even if the price drops
the consumers will not buy much more. Theywilonly consume on which they are satiated. Likely,
Inelastic demand is a serious problem for farmers.

Rs.

When price falls the increase in quantity does

Q not make up for the revenue loss due to the
Rs.
A lower price.

A (the lost revenue) is greater than B the

B revenue increase.
 Q

Are there obvious substitute goods available?

Substitutes are those products which can easily replace with other products. There are 2 types of
substitutes.

1) Direct Substitute 2) Indirect Substitute

In the farmers market we can easily find substitutes of many goods. Some of the following are:

Onions, Potato (from different farms) Vegetable oil, Honey these are the examples of substitutes
in Farmers Market.

Are there important complements?

Complements good is basically the product which adds value to the other product or we can say
that we use the one product with other product. In Farmers Market we can easily find many of
the complements.

e.g: Vegetables with vegetable oil, Milk and cereal are some examples of Complements In
Farmers Market.

Is there decreasing marginal utility of consumption?

The Marginalutility tends to decrease with consumption, sometime it reaches to zero and this
condition depends on the good consumed by the consumers. Marginal utility helps the consumers
to make different choices to gain the benefit in their limited budgets. In Farmers market this case
is applicable in many situations

Part 2
Questions and Answer

A) Describe the production process in detail.

The production process is mainly divided in two parts

Land Preparation

Preparing the soil is the first step to ensure that the crops can achieve the best yields. It is
essential to furnish the plants with the best soil conditions for their turn of events. A decent
seedbed ought to be ready with the right supplements and the right conditions that can allow
seeds to germinate first and then plant the crop for further development. Traditionally this has
been done with aggressive practices such as plowing, cutting and burning etc.

Crop operation

Several operations determine a crop's performance, including seeding and weeding. Adequate

seeding rates, spacing and placement are crucial for the development of the plant. This is also
influenced by soil conditions and the cropping system. From manual broadcast seeding to
precision pneumatic seeding, there is a wide range of tools and equipment that can improve seed
operations in the specific socio economic and environmental context of farmers.

What are the variable costs?

Those costs which decrease or increase as the use decreases or increases.

ITEMS Quantity Cast Cost

Fuel 6-7 liter 1Acre

Seed 1kg 2200-2800 Rs. / Acre

Fertilizer 2 DAP Phosphorus 18000 Rs. / Acre

2 DAP Urea 4800 Rs. / Acre
1 Nitro Gen Gadara 4200 Rs. / Acre
1 Potash 12kg Pack 2500 Rs. / Acre
Equipment Repair Tractor and machinery 5000 Rs. /Acre

Labor Cost 12% Total Profit/12*100

Grower return = (Price x Yield) -
Costs

What are the fixed costs?

Fixed costs are those costs which remain constant as use increases. In farming, the fixed costs are
on the following things:
 Management
 Equipment
 Land
 Taxes

What are the production inputs?

Q3. Are there any rules in the market? If yes Justify it.
There are some rules in Farmers Market as well as other markets. Government take actions
against the violation of these rules.

Following are the rules in Farmers Market:

1. Stalls

Farmers’ markets have a rule of assigning stalls to vendors so that each vendor will have a
defined place to display and sell items.

2. Product Preference

Home based vendors of crafts, prepared foods, and baked goods shall be given preference.

3. Producer Only Markets

Farmers market is the place where producer only can only sell their products in markets which
they have produced themselves.

4. Selling Foods

Vendors selling meats, processed foods, prepared foods, baked goods and other
 perishable items must do so in compliance with the requirements of the Health Department.

5. Food Safety
In food safety law, it addresses a variety of issues including the storage, display, and
transportation of food. Food safety rules are often addressed in farmers’ market rules.

6. Food Sample
Vendors may provide free samples to customers as long as long as this is done in a safe and
sanitary manner in compliance with Department of Health requirements.

7. Insurance

There are risks involved in participating in a farmers’ market. For example, an employee could
be injured while working on your farm or bringing your products to the market.

PART 2
Market Analyses
Q4. Say something interesting about the market.
A. How would changes in input prices affect the market equilibrium?

When price of inputs increase, assuming no alternate in other elements, then the cost of
production rises. As an end result, supply decreases due to fall inside the profitability stage. …
As there is a decrease in deliver most effective, equilibrium quantity will fall, however
equilibrium charge will upward push.

B. Is there a policy that if implemented would improve efficiency?

B. Governmental regulations upon the efficiency of the financial system, together with both
conventional governmental regions (including justice, defense, and environmental safety) and the
full-size and developing percentage of governmental applications aiming to redistribute profits.
A proposed precept of legitimacy states that each motion set by a legislature represents a social
judgment that society is higher off for that action.

C. What implications would an improvement in production technology have?

Technology has a big effect on businesses, in terms of each updating current products and
locating new ways of producing merchandise. Technology benefits organizations as it permits
them to produce higher quantities, make products more consistent and be extra cost-effective.

D. Is the market outcome efficient?

The green outcome in a market is defined as a situation where in the marginal price is similar to
the marginal advantage. A green marketplace is one where firms and clients get the pleasant
output for their production and pay, respectively.

E. How is market surplus divided between consumers and producers/sellers?

Consumer surplus is the distinction among what a client is inclined to pay and what they
definitely pay for an excellent or carrier. … The producer surplus is the distinction among the
actual rate of a great or carrier–the marketplace price–and the bottom rate a producers could be
willing to accept for an amazing