Chapter 1 What is Agricultural Economics 2011 - PowerPoint by 0IeufGb


									         AGEC 105
Introduction to Agricultural

        Dr. Oral Capps, Jr.
TA Information
Romer, David.
      “Do Students Go to Class? Should They?”
              Journal of Economic Perspectives
                     Summer 1993:167-174

• Attendance counts in economics courses indicates that
  absenteeism is rampant
• About one-third of students are not in class
• The difference in performance between a student who attends
      regularly and one who attends sporadically is about a full
      letter grade!
  Justification for AGEC 105

-- The level of basic economic literacy among U.S.
citizens is appalling according to a recent national survey
conducted by the Gallup organization and the National
Council on Economic Education
Introduction to the Field
The Food & Fiber Industry
Understanding Consumer Behavior
Business Behavior & Market Equilibrium
Government in the Agricultural Sector
Macroeconomics of Agriculture
International Trade
        What is your EQ?
EQ = Economics Quotient
Similar to IQ (Intelligence Quotient)
Opportunity to Earn Additional (extra credit)
                   Do You Know?
The current U.S. Secretary of Agriculture is ______.
On average, the U.S. farmer gets ______ cents from each dollar spent
on food by consumers.
The current Commissioner of Agriculture of Texas is ______.
U.S. consumers spend about ______ percent of their disposable
personal income on food.
20% of U.S. farmers produce _______% of U.S. agriculture output.
The magnitude of the U.S. federal budget deficit currently is
The magnitude of the U.S. national debt is $__________.
                  Do You Know?
The acronym GDP stands for ___________ .
The index most frequently used by economists to measure inflation
is the ___________.
___________ policy refers to changes in government spending and
The number of U.S. farmers is roughly ________ million.
The current price of:
       gold = $______/ounce          corn = $______/bushel
       cotton = $_______/pound       soybeans = $______/bushel
                Do You Know?
Crude oil prices are $______ per barrel.
The chairman of the Federal Reserve System is _______.
The letter K on your dollar refers to which Federal
Reserve Bank?
The current inflation rate is ___________.
The current unemployment rate is _______.
The agricultural sector accounts for what percent of the GDP
in the United States? _______%
The GDP of the United States is roughly $________ trillion.

Who was the first Agricultural Economist?
  What is
 Chapter 1
Bless the Lord, O my soul,
thou dost cause the grass to
grow for the cattle, and
plants for man to cultivate,
that he may bring forth
food from the Earth.
    Psalm 104
         Topics of Discussion
     Scarce Resources
     Making Choices
     Microeconomics versus Macroeconomics
     Positive versus Normative Economics
     Alternative Economic Systems
    Role at the Microeconomic Level
    Role at the Macroeconomic Level
    Marginal Analysis
       Scarce Resources
Natural and biological resources
  Natural: land, mineral deposits, water
  Biological: livestock, crops
Human resources
   labor
Manufactured resources
   capital, machines, equipment, structures

                                               Page 2
         Making Choices
Resource scarcity forces consumers and
 producers to make choices
Opportunity cost – an implicit cost associated
 with economic decisions
Specialization – comparative advantage and the
 basis for trade
Individual decisions – maximization of
 consumer utility and producer profits
Societal decisions – production possibilities
 given existing resources
                                            Pages 3-4
           Opportunity Cost
• The implicit cost associated with the next
  best alternative in a set of choices available
  to decision-makers.
  Opportunity cost associated with pursuing a
  degree at Texas A&M University.
Problem 8 in Chapter 1 (see page 9)
the separation of productive activities between persons or
geographic areas in such a manner that none of these
persons or regions is completely self-sufficient.

Example of specialization for regions of the United States
Relative strengths of Kansas
Relative strengths of Idaho
Relative strengths of Florida
Each state specializes in what it does
best and trades with other states…
                                         Page 4
Each state specializes in what it does
best and trades with other states…
                                         Page 4
Each state specializes in what it does
best and trades with other states…
                                         Page 4
Each state specializes in what it does
best and trades with other states…
                                         Page 4
       Scope of Economics
 Microeconomics versus macroeconomics
    Micro - individuals or groups of individuals
    Macro - broad aggregates at economy level
 Fallacy of Composition
    That which is true in an individual situation is not
     necessarily true in the aggregate
 Positive versus normative economics
    Positive - “what is”, or “what would happen if”
    Normative - “what should be”
 Alternative economic systems
    Capitalism, socialism, communism
    U.S. has mixed economic system                         Pages 5-6
Definition of Economics
“…a social science that deals with how
consumers, producers and societies
choose among the alternative uses of
scarce resources in the process of
producing, exchanging, and consuming
goods and services”.

                                   Page 5
   What is Agricultural
“…an applied social science that deals
with how producers, consumers and
societies use scarce resources in the
production, processing, marketing and
consumption of food and fiber products”.

                                     Page 6
      What Does an Agricultural
           Economist Do?
• Role at microeconomic level
    Production economists
    Market economists
    Financial economists
    Resource economists

• Role at macroeconomic level
• Marginal Analysis
       Federal Reserve Economic Database
• Please do all problems in Chapter 1 (see page 9)

• Review Graphical Analysis (pages 10-12)

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