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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 />~. <\ ,..~.., c: <br />U'J.,:;_,J~...u <br /> <br />long-run el asticities. Based on previous econometric studies and the abil- <br />ities to predict the 1967-74 historical period, price elasticities of <br />aggregate farm output demand are assumed to be -0.145 in the short-run and <br />-0.2071 in the 1 ong- run. <br /> <br />In addition to the equilibrium quantity and prices received index, <br />other projected variables include prices paid by farmers, the parity ratio, <br />government diversions as a percent of farm output (if a price or farm <br />income support policy is specified), gross farm income, production costs, <br />and net farm income, in both real and nominal dollars. <br /> <br />F. COMMODITY PRODUCTION AND UTILIZATION COMPONENT <br /> <br />The Constant Price Supply and the Constant Price Demand components <br /> <br /> <br />establish quantities of supply and demand without the feedbacks of the <br /> <br /> <br />price effec t. <br /> <br />\~ith the price effect, supply woul d increase if commodity prices were <br />raised and decrease if prices were lowered. However, at this step in the <br />model, changes in supply are produced irrespective of price via a produc- <br />tivity shifter. Similarly, changes in demand are established by estimates <br />of changes in consumption irrespective of price. Both of these changes can <br /> <br />II -38 <br />