In terms of agricultural sector the supply and demand for agricultural products are such that small changes in agricultural supply will result in drastic changes in prices. On the other hand, large changes in farm prices have modest effects on agricultural output. 1. Do exports increase or reduce the instability of demand for farm products? (Explanation needed)

2. Given the importance of agricultural sector in LDCs, discuss the following issues that might contribute to farm challenges

(a) the inelastisity of demand for farm products

(b) rapid technological progress in farming

(c) modest long run growth in the demand for farm commodities

3. Many developing countries complain about agricultural price support that is practiced in USA and EU countries. Explain the economic effects of these price supports (Include environmental and global impacts)