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1. Introduction to Economics and Farm and Food
System |
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Decision Making In Response To Change |
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Historical sketch of the need
for decision making in agriculture
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farming
- food processing
- retail
- export
changes occur constantly
- technology
- prices
- institutions
- humans
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Economics is about choices and decision making |
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Scarcity
Economic sacrifices
Opportunity cost
Definition of “Economics”
Wants, Goods
Resources
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Economics Uses Abstractions |
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Benefits vs. costs
Microeconomics
Macroeconomics
Theories and Models
Normative vs. Positive
Fallacy of Composition
Ceteris Paribus
Causation vs. Association
Unintended consequences
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Farm and Food System |
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Simplified model of U.S. economy
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Functional organization of agribusinesses
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Significance of agriculture to U.S. economy
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Structure and performance of farms and agribusinesses
Family vs. corporate farming
Vertical integration and vertical coordination
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Economic System - Some Basic Concepts |
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Exchange or Trade |
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Producer Surplus, Consumer Surplus
Transaction Cost
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Production Possibilities |
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Products (outputs)
Resources (inputs or factors of production)
Land
Labor
Capital
Entrepreneurship
or management
Technology
Institutions (oversight in text)
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Choice of Products |
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Opportunity cost
Law of increasing opportunity costs
(Law of
diminishing returns)
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Choice Mechanisms |
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Capitalism - consumers and producers make choices in free markets
Command economy - centralized decision - govt. makes choices
Mixed capitalism - govt. guides markets, but consumers and producers
make choices in markets.
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Political Issues Often Deal With Society's |
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Choice of products (e.g. less pollution)
Move production possibilities frontier (e.g. more training)
Distribution of products (e.g. tax the rich)
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Government Intervention |
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Property rights
Professional licensing
Minimum wage
Fiscal and monetary policies
Antitrust policies
Quotas, tariffs, export enhancement
Social security, Medicare
Welfare, food stamps
Subsidize education, research
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