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<br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />M:"~"l. <br />v v -" v... .. <br /> <br />tity of resources can be used more or less intensively in any particular <br />year. Over a multi-year period, the quantity of resources can be increased <br />or decreased depending upon the economic conditions which are encountered <br />in the agricultural sector. <br /> <br />Therefore, the aggregate farm output supply function is dependent on <br />two principle parameters: short- and long-run price elasticities. The <br />NIRAP system has performed well in tracking the 1967-74 period with aggre- <br />gate supply elasticities of .2 in the short-run (one to two years) and 1.0 <br />in the long-run. That is, it was determined that in the short-run if <br />aggregate prices increased by one percent, aggregate farm output increased <br />by .2 percent. However, in the long-run, a one-to-one relationship was <br />determined between aggregate prices and output. Such parameters are broad- <br />ly consistent with past econometric estimates. However, the supply elas- <br />ticity has been increasing over time due to rising proportions of price <br />responsive inputs such as fertilizer and falling proportions of price unre- <br />sponsive inputs such as land and family labor. For example, as farms have <br />more and more hired labor, farmers are adjusting short-run production to <br />changes in the price of outputs and the price of labor; increasing and <br />decreasing labor input and output as economic conditions change, much like <br />manufacturing plants. This contrasts with the past where the family pro- <br />vided almost all of the labor and therefore the farmer was relatively <br />unconcerned about the price of labor. Thus, the aggregate supply elastici- <br />ties have been adjusted upward to .285 in the short-run but left at 1.0 for <br /> <br />II -36 <br />