Capitalism and Economy IAFNR Agribusiness ModuleIAFNR Agribusiness Module

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Capitalism and Economy

Capitalism and EconomyIAFNR Agribusiness ModuleEconomicsWhat is Economics?Economics isthe study of allocation of scarce resources among competing alternatives.the study of how individuals and countries decide how to use scarce resources to fulfill their wants.the study of the decisions involved in producing, distributing, and consuming goods and services.

Lets learn a little more about Economics!

3 Components of EconomicsDid you notice some of the key words mentioned in the definitions of Economics? They are the three components of Economics.ScarcityNot enough resources to satisfy wants and needsNot to be confused with a shortageResourcesLand, Labor, Capital, and ManagementWants and NeedsCan you think of some examples of each?Are these Needs or Wants?

Image retrieved from: http://www.thenewstrack.com/top-10-most-expensive-basketball-shoes-in-the-world/3 Economic QuestionsIn order to manage the 3 components of Economics modern societies must answer these 3 economic questionsWhat goods should be produced, and how much of each?How should these goods be produced?Who should get what and how much?

Economic SystemsTraditionalThings are done the way they have always been done.Decision based upon customs or religious beliefs; passed down from generation to generationTraditional systems exist in limited parts of Asia, Africa, the Middle East and Latin America

CapitalismIndividuals have free reign over their time and resources and can determine how to use those assetsOwnership is privateLittle involvement of governmentSelf-regulated SystemFree market determines pricesCompetition is driving force of activity and decisions

Economic SystemsTraditionalThings are done the way they have always been done.Decision based upon customs or religious beliefs; passed down from generation to generationTraditional systems exist in limited parts of Asia, Africa, the Middle East and Latin America

CapitalismIndividuals have free reign over their time and resources and can determine how to use those assetsOwnership is privateLittle involvement of governmentSelf-regulated SystemFree market determines pricesCompetition is driving force of activity and decisions

CommunismTotalitarian system of government that a single body controls government owned production meansTotal control of economic matters Individuals have no powerEveryone contributes according to needCapitalisman economic system characterized byprivateor corporate ownership ofcapitalgoods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in afree marketPrinciples of Capitalism in AgribusinessPrivate ownership of property and resourcesAnyone that owns property may use it in production (ex. Crops or business)Potential for profitProfit is a direct result of business decisionsFree Market determines pricesBased upon supply/demandCompetition is driving forceHow many companies can produce a similar product? Unlimited!Creates change among products and supply/demand

The Big Picture of AgribusinessWhere do you see capitalism at work in Agribusiness?The United States EconomyA Mixed Economy

Image retrieved from: http://redalertpolitics.com/2013/03/28/marine-told-he-cant-fly-american-flag/The United States EconomyA mixed systemThe U.S. Economy operates with aspects of different economic systems but is known to most as the free enterprise system Characteristics of the U.S. EconomyLittle or no government controlSome government regulation for safety of the publicFreedom of enterpriseFree to own and make decisions about factors of productionFreedom of choiceRights to own private propertyProfit incentiveCompetition

Image retrieved from: http://www.dailygalaxy.com/my_weblog/2008/08/can-the-us-econ.htmlReferencesRicketts, C., & Ricketts, K. (2009). Agribusiness Fundamentals & Applications. New York: Delmar Cengage Learning.Merriam-Websters Dictionary (2014). Capitalism. Retrieved from http://www.merriam-webster.com/dictionary/capitalism