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What is Agricultural Economics

Lecture 2. How is agricultural economics different from economics? Why do we need to take this course?
by

Eric Micheels

on 7 January 2015

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Transcript of What is Agricultural Economics

How do firms allocate resources?
What decisions do they make?
1. What to produce?

2. How to produce it?

3. How much to produce?

4. When to produce?

5. For whom to produce?
Resources
Resources are scarce

There are different types of resources
Natural and Biological
Land, minerals, oil and natural gas, etc.
Human
Labour, management
Manufactured
Machines, equipment, structures
Agricultural Economics
Agricultural economics is a branch of economics that focuses on how producers, consumers, and societies allocate scarce resources among competing alternatives in the food and fiber industries.
Levels of Economic Activity
Micro level
Focuses on firms or households
Objective is to maximize profit (firm) or utility (household)

Macro level
Focuses on the entire economy at national and international level
World events are important
Positive vs. Normative Economics
Positive economics
What is...
What would happen if...
Behaviour is explained or predicted, but not judged.

Normative economics
What should be...
What ought to be...
Important for policy
Politics will likely determine which alternative one favours
Assumptions in microeconomics
1. Actors in economics models are rational
2. Free information
3. Homogeneity
4. Objective of firm is to maximize profit
5. Ceteris Paribus (all else equal)
And why should I care?
What is Agricultural Economics?
As social scientists, agricultural economists deal with both the laws of human nature as well as the laws of the physical sciences.

More than just farm economics, although that is much of the history of ag econ
What to produce?
What means of production?


Where should I produce it?


Should I remain independent?
How to produce it?
Independent or Alliance?
How much to produce?
Price
Quantity
Supply Curve
Q2
Q1
Should we produce here?

or here?
Wait a minute...I can't 'really'
control how much I produce
What do you do when there is a surplus?

How do you allocate production if there
is a deficit?
Should we produce regular carrots or should we produce
baby carrots?
When should we produce?
Seriously, though, timing is
important for some crops
For whom to produce?
What lies ahead??
1. How does economics inform policy?
2. Supply and Demand
3. Elasticities
4. Consumers and Markets
5. International Trade
AGRC 113 -- January 8, 2013
Announcements:
Please vote in the Doodle poll
No tutorial this week (probably will be one next week)
Crop Production Show -- who's going?
Tumblr blog on course topics (http://www.tumblr.com/blog/ericmicheelsagrc113)
Come to the Table -- Global Youth Ag Summit
One Minute Essay
You have one minute to write this. I am not looking for a Pulitzer Prize. But you must write in sentences.

Question/Topic:

The assumption of profit maximization is a strong one. What might be some other objectives that firms pursue?
Full transcript