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What is Agricultural Economics? Chapter 1

What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

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Page 1: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

What isAgriculturalEconomics?

Chapter 1

Page 2: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Discussion Topics

Scope of economicsDefinition of economicsDefinition of agricultural economicsWhat do agricultural economists do?

Page 3: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Is the sky falling? What factors influence demand and supply along the food and fiber supply chain? How do actions by the Federal Reserveaffect agriculture? And how important is international agricultural trade? Chicken Little is addressing the first question. We will tackle the others and more as we move through a wide variety of topics this semester.

Page 4: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Scarce ResourcesNatural and biological resources

• 3.5 million square miles of land surface

• 954 million acres of land in farms

Human resources• 141.1 million people in U.S. civilian labor force

Manufactured resources• 3.9 million miles of highways

• 121.4 million tons of steel making capacity

Pages 4-5

Page 5: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Making ChoicesResource scarcity forces consumers and

producers to make choicesOpportunity cost – an implicit cost associated

with economic decisionsSpecialization – comparative advantage and the

basis for tradeIndividual decisions – maximization of

consumer utility and producer profitsSocietal decisions – production possibilities

given existing resources (guns versus butter)

Pages 5-7

Page 6: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

An Example ofSpecialization

Page 7: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Relative strengths of KansasRelative strengths of Kansas

Page 7

Page 8: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Relative strengths of IdahoRelative strengths of IdahoPage 7

Page 9: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Relative strengths of FloridaRelative strengths of FloridaPage 7

Page 10: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Each state specializes in what it doesbest and trades with other states…

Each state specializes in what it doesbest and trades with other states…

Page 7

Page 11: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Each state specializes in what it doesbest and trades with other states…

Each state specializes in what it doesbest and trades with other states…

Page 7

Page 12: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Each state specializes in what it doesbest and trades with other states…

Each state specializes in what it doesbest and trades with other states…

Page 7

Page 13: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Each state specializes in what it doesbest and trades with other states…

Each state specializes in what it doesbest and trades with other states…

Page 7

Page 14: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Scope of EconomicsMicroeconomics versus macroeconomics

• Micro - individuals or groups of individuals• Macro - broad aggregates at economy level

Positive versus normative economics• Positive - “what is”, or “what would happen if”• Normative - “what should be”

Alternative economic systems• Capitalism and socialism• U.S. has mixed economic system

Pages 7-8

Page 15: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

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 7

Page 16: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

What is Agricultural Economics?

“…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 9

Page 17: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

In SummaryResource scarcity -

natural, human and manufactured – forces individuals and societies to make choices

Comparative advantage leads to trade

Micro vs. macroeconomicsDefinition of agricultural

economics

Page 18: What is Agricultural Economics? Chapter 1. Discussion Topics Scope of economics Definition of economics Definition of agricultural economics What do agricultural

Chapter 2 presents an overview of the U.S. food and fiber industry…