For one-semester, introductory courses in Agricultural Economics or Environmental Economics.This innovative text provides a broad view of the food system, with its emphasis on the links among financial institutions, the macroeconomy, world markets, government programs, farms, agribusinesses, food marketing, and the environment. Taking a macro-to-micro approach, the text introduces "high interest" topics students can relate to first, using them to capture student interest before introducing microeconomics topics. It illustrates the six economic concepts which form the foundation of the economist's decision-making process including supply and demand, opportunity cost, diminishing returns, marginality, measuring costs and returns, and the externalities of transactions. Presented in a non-threatening conceptual framework, the material covered in this text maintains a strong attachment to the application of agricultural economics to the real world.
Table of Contents
1. The Food Industry.
2. Introduction to Agricultural Economics.
3. Introduction to Market Price Determination.
4. Financial Markets.
5. Money and Financial Intermediaries.
6. Monetary Policy.
7. The Circular Flow of Income.
8. Fiscal Policy.
9. International Trade.
10. Agricultural Policy.
11. The Firm as a Production Unit.
12. Costs and Optimal Output Levels.
13. Firm Supply and the Market.
14. Imperfect Competition and Government Regulation.
15. The Theory of Consumer Behavior.
16. The Concept of Elasticity.
17. Food Marketing: From Stable to Table.
18. Futures Markets.
19. Farm Service Sector.
20. Investment Analysis.
21. Environmental Policy and Market Failure.
22. The Malthusian Dilemma.
23. Economic Development and Food.
This text is designed for a one-semester (or two-quarter sequence) introductory course in agricultural and environmental economics. Many texts view agricultural economics in a rather narrow context of the profit-maximizing farm business. We prefer a broad view of the food system that emphasizes linkages between and among financial institutions, the macroeconomy, world markets, government programs, farms, agribusinesses, food marketing, and the environment. The objective of this text is to cover many topics lightly rather than any one or two topics in depth. The text is designed to allow a maximum of "skipping around" rather than requiring a strict sequential ordering of the chapters.Economics is about decision making. It deals with how decisions are made under varied conditions and situations. It also deals with the evaluation or implications of alternative decisions for a given situation. Since decisions are a fact of everyday life, economics is with us in most of what we do. Even monks in a monastery who sell fruitcakes to support their spiritual endeavors make economic decisions when they decide what ingredients to buy and what price to ask for their product.You, the college student, are surrounded by economic decisions as you pursue academic success at the institution of your choice. Several of the economic decisions you must make will be discussed briefly to introduce you to six economic concepts that will recur throughout this book. These concepts form the foundation of how economists approach decision making. SUPPLY AND DEMANDThere is probably no better known (and more poorly understood) concept in economics than supply and demand. Supply and demand are the central nervous system of the economic organ: they are the key to price determination. One decision that each college or university student must make is, What am I going to major in? The specific answer to that question depends upon the criterion used by the individual student to make a choice.A student who bases his or her choice of a major on potential income is certainly into the use of supply and demand. In today's market we all know that computer engineers earn more than high school teachers. Why is that? It is a simple matter of supply and demand in the determination of the price for computer engineers and for high school teachers. In Chapter 3 the basic foundations of supply and demand will be examined in detail. OPPORTUNITY COSTA second fundamental concept of economics is the concept of opportunity cost. Whenever a resource is employed in one activity, that means it can't be used in another. Something must be given up to do something else. The value of what is forgone is the opportunity cost of doing something else.A relevant economic question that each college student should ask is, What does it cost for me to attend the university? Most students will think of "costs" as tuition, residence hall fees, meals, and the like. From the economist's point of view, probably the single biggest cost (if you are in a public university) is the opportunity cost of the student's own time. By attending college you are forgoing the income you would earn flipping burgers at the Burger Barn. Full-time pay at minimum wage (which is probably what you would make as a high school graduate) is about $12,000 a year. Therefore, $12,000 is your annual opportunity cost of attending the university. DIMINISHING RETURNSA basic concept in economics is that as you add more and more of something while holding everything else constant, the additional benefit from each additional unit eventually begins to decline. That is, the benefits increase at a decreasing rate. This we call diminishing returns.In the context of the university student this is illustrated by asking a familiar question: How much should I study for the next test? Initially, you might think the answer is "as much as possible," but closer examina