Lecture 1- Agriculture economics

Economics

The branch of knowledge concerned with the production, consumption and transfer of wealth. It’s how societies, governments, business, households and individuals allocate(distribute) their scare(limited) resources

Conceptual models of behavior

Predict response to changes in policy and market conditions

Resources

• a stock of supply of money materials, staff, and other assets

• Drawn on by a person or organization in order to function effectively

• Provide, a person or organization with the things they need to be successful.

Lack of resources

Prices increase, scarcity, panic

Resource types

• natural + biological(land/minerals)

• Human(managment)

• Manufactured(capital investments)

Economic Models

• Predict behavior(different people, different behaviors)

• Expecting patterns of economic behaviors

Levels of economic activity

• Microeconomics

• Market economics

• Macroeconomics

Microeconomics

• the economics of individual producers and consumers

• Production management decisions that effect the profit of a business

  • which inputs to purchase

  • Production technique

  • Product to produce

  • How much to produce

  • When to produce

Macroeconomics

• considers the entire economics system

• How our economy functions as a whole

• How various policies & institutions affect system vitality

• Unemployment & inflation rates

• International trade

• Us agriculture & the international perspective

  • export

  • Import

  • Humanitarian concerns

Market Economics

• established whenever potential buyers and sellers interact to establish prices & exchange goods

• A market is distinguished from market place

• Only decisions each producer or consumer can make is a choice of whether or not to buy or sell at the market place

• Four changes affect the marketing of a good

  • time

  • Place

  • Form

  • Possession

Ceteris Paribus

• “everything else being equal”

• Economic principal is valid only when all other external factors remain the same

Opportunity Cost

• the value of a resource in its highest value of alternative use

• All economic resources have value

• Can’t be measure directly(estimated)

• The study of economics all about economic values(cost & return)

Diminishing Returns

• central to the process of economizing

• As you increase the amount of something it will eventually increase at a decreasing rate

• Expressed in the “law of diminishing marginal utility”

Marginality

• marginal is used to indicate the change in some benefit or cost, when an additional unit is produced

• Marginal value of production or consumption