Introduction to Agricultural Economics

Economics

Study of how people choose to use scarce or limited productive resources to produce various commodities and distribute them to various members of society for their consumption

Oikonomia

Greek origin of economics

Household management

Oikonomia means

Macroeconomics

Large economy; Whole or aggregate economy that deals with GNP, GDP, inflation, and unemployment

Microeconomics

Small economy; deals with individuals - household, firms, markets, consumers, and producers

Positive Economics

Makes statements on what is or what will happen; factual; can be tested; unbiased; cause and effect

Normative Economics

Make statements on what should be; biased; opinion-based; value judgements is used in formulating policies

Positive and Normative Economics

Bases for formulating policies

Economic model

Basic building block in the logic of the economist

Agricultural Economics

Deals with allocation of scarce resources for competing alternative uses found in the production, processing, distribution, and consumption of food, feed, and fiber.

Harvard and Wisconsin University

In 1903 agricultural economics was first taught at what universities in US?

Bureau of Agricultural Economics

Formed under the US Department of Agriculture in 1921

June 22, 1963

When did Bureau of Agricultural Economics was formed in the Philippines?

Office of thw Secretary of Agriculture and Natural Resources

Under this office, Bureau of Agricultural Economics was formed

Production Possibilities Frontier

Also known as Production Possibilities Curve that is useful for illustrating the choices available to society and its constraints

Production Possibilities Frontier

Presents all the possible combinations of the maximum amounts of two goods and services that can be produced with a given amount of resources

Negative, inverse, downward

The slope of PPF is _________

Negative slope

In PPF, it signifies that one of the two goods available needs to be sacrificed to increase production of the other one.

Negative slope

Explains economic principles of scarcity

Ceteris paribus

All other things are held constant

Inside the PPF

Possible but inefficient use of resources

Outside or beyond the PPF

Infeasible; impossible; cannot be done/get; unattainable due to lack of resources.

Increased production

What happens if PPF curve shifts to the right?

Decreased production

What happens if the PPF curve shifts to the left?

Along the PPF

Movement that happens in PPF when there is change in quantities of two goods; Trade-off; Opportunity cost

Opportunity cost

Value of the best forgone alternative; best choice but not chosen

Diminishing returns

As you increase the amount of something, where other factors are held constant, and only focusing on one factor, the additional impact of that will eventually increase at a decreasing rate

Law of Diminishing Marginal Utility

Law that focuses in consumption

Law of Diminishing Marginal Utility

Hermann Heinrich Gossen’s First Law or Gossen’s First Law

Law of Diminishing Marginal Utility

Consuming more and not getting the same satisfaction as the first one.

Law of Diminishing Marginal Product

Law that focuses in production

Law of Diminishing Marginal Product or Productivity

It proclaims that increasing one input constant and maintaining other inputs constant helps in increasing the output initially.

Marginality

An additional or incremental unit of something

Marginal Cost

extra cost of producing one more item.

Marginal benefit

extra benefit you get from consuming one more unit of a product

Economic resource

Scarce and has a cost (not free) because it is valuable

Economics

A social science and even utilizes principles from other social sciences such as polsci, history, and sociology

Economics

Describes, analyzes, explains, and correlates economic behaviour

Utility

Term economist used to describe satisfaction and individual feel after consuming a product or service.

Marginal Utility

Increase in utility an individual experienced after consuming one more unit of a product or service.

Self-interest, scarcity, choice

Foundation of economics

Policy Economics

concerned with controlling/influencing economic behaviour or its consequence

Isoquant curve

Shows all combinations of two variable inputs that will produce a given level of output

Isocost line

Shows all combinations of factors that cost the same amount

Indifference curve

Shows all possible combinations of two goods that provide the same level of utility (satisfaction)