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AGEC 105 Introduction to Agricultural Economics Dr. Oral Capps, Jr.
AGEC 105Introduction to Agricultural Economics
Dr. Oral Capps, Jr.
TA InformationMichael NepveuxOffice:Phone: Email: [email protected] hours:
Jing YiOffice: AGLS 391Phone: 617-943-3752Email: [email protected] Office hours:
Baby Boomers vs. Millennials
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Baby Boomers vs. Millennials
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Romer, David.“Do Students Go to Class? Should They?”
Journal of Economic PerspectivesSummer 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
UNITSIntroduction to the Field The Food & Fiber IndustryUnderstanding Consumer BehaviorBusiness Behavior & Market EquilibriumGovernment in the Agricultural SectorMacroeconomics of AgricultureInternational Trade
What is your EQ?EQ = Economics QuotientSimilar to IQ (Intelligence Quotient)Opportunity to Earn Additional (extra credit) Points
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 taxation.
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.
AGRICULTURAL ECONOMICS -- THE OLDEST PROFESSION?
Who was the first Agricultural Economist?
What is AgriculturalEconomics?
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 DiscussionSCOPE OF ECONOMICS
Scarce ResourcesMaking Choices
DEFINITION OF ECONOMICSMicroeconomics versus MacroeconomicsPositive versus Normative EconomicsAlternative Economic Systems
DEFINITION OF AGRICULTURAL ECONOMICSWHAT DOES AN AGRICULTURAL ECONOMIST DO?
Role at the Microeconomic LevelRole at the Macroeconomic LevelMarginal Analysis
Scarce ResourcesNatural and biological resources
Natural: land, mineral deposits, waterBiological: 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)
Specialization
Definition: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
Page 4
Each state specializes in what it doesbest and trades with other states…
Page 4
Each state specializes in what it doesbest and trades with other states…
Page 4
Each state specializes in what it doesbest and trades with other states…
Page 4
Each state specializes in what it doesbest and trades with other states…
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 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 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
IMPORTANT WEBSITEShttp://agecon2.tamu.edu/people/faculty/capps-oral Cappshttp://www.ers.usda.gov USDAhttp://research.stlouisfed.org/fred2/
Federal Reserve Economic Databasehttp://afcerc.tamu.edu
Assignments• Please do all problems in Chapter 1 (see
page 9)
• Review Graphical Analysis (pages 10-12)
