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I I I I I I I I I I I I I I I I I I I \ ": .' ; '. .. ---~. .:', ~"~T ~{ ~ ~ '( ~~ ';..J _~ J "" I be geometrically represented as a horizontal shift in the supply or demand curve. These two independent changes are brought together in the Commodity Production and Utilization component through a price establishment mech- anism which permits a market clearance such that the total factors of sup- ply equal the total factors of demands. The output is the determination of the equilibrium price and quantities of the individual commodities. Infor- mation required by this component includes supply shifts provided by the technological change simul ator in the Constant Price Supply component, demand shifts provided by the Constant Price Demand component and prices received by farmers and total farm output provided by the Aggregate Farm Output component. The component simultaneously solves for price and quan- tityequilibrium levels for 31 of the more important crop and 1 ivestock commodities produced in the agricul tural sector by using both the above 1 isted inputs and an internal set of elasticity coefficients for supply and demand. Elasticity is defined as the percent change in quantity divided by the percent change in price. It can be interpreted as: given a change in price, how will the production or consumption of that commodity be changed. The el asticity of a commodity can be cl assified into one of three catego- ries -unitary, elastic, or inelastic- depending upon the responsiveness of the change in quantity to the change in price. Supply (demand) has unitary elastiCity if a given percentage change in price causes an equal percentage change in quantity produced (consumed). An elastic supply (demand) is whe- II -39