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Introduction to Agricultural Economics

ISBN: 9780130195722 | 0130195723
Edition: 3rd
Format: Hardcover
Publisher: Prentice Hall
Pub. Date: 1/1/2002

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SummaryTable of Contents
For Introduction to Agricultural Economics courses at the freshman/sophomore undergraduate level. This jargon-free text provides beginning agriculture students with a readable, systematic understanding of the basic concepts and issues in economics as they relate to the food and fiber industrya major segment of the U.S. economy. Covering the entire scope of key economic principles and their application to the food and fiber system, it traces major microeconomic, macroeconomic, and global forces influencing the decisions of producers and consumers of food and fiber products, and focuses on the leading problems and issues confronting this important industry today.
PART I Introduction1(52)
What is Agricultural Economics?
3(17)
Scope of Economics
4(4)
... MORE
Scarce Resources
5(1)
Making Choices
6(2)
Definition of Economics
8(2)
Microeconomics versus Macroeconomics
8(1)
Positive versus Normative Economics
9(1)
Alternative Economic Systems
9(1)
Definition of Agricultural Economics
10(1)
What Does an Agricultural Economist Do?
10(1)
Role at the Microeconomic Level
10(1)
Role at the Macroeconomic Level
11(1)
Marginal Analysis
11(1)
What Lies Ahead?
11(1)
Summary
12(1)
Definition of Key Terms
13(1)
References
14(1)
A Review of Graphical Analysis
14(5)
Constructing a Graph
14(1)
Slope of a Linear Curve
15(2)
Slope of a Nonlinear Curve
17(2)
Exercises
19(1)
The U.S. Food and Fiber Industry
20(33)
Indices
21(2)
What Is the Food and Fiber Industry?
23(3)
Employment
23(1)
Output
24(2)
Changing Complexion of Farming
26(10)
Physical Structure
26(4)
Productivity
30(2)
Profitability
32(1)
Financial Structure
33(3)
Other Sectors in the Food and Fiber Industry
36(11)
Farm Input Suppliers
36(3)
Food Processors, Wholesalers, and Retailers
39(2)
Value Added Process
41(3)
Fiber Manufacturers
44(2)
Shippers and Handlers
46(1)
Importance of Export Markets
46(1)
Summary
47(1)
Definition of Key Terms
48(2)
References
50(1)
Exercises
50(3)
PART II Understanding Consumer Behavior53(68)
Theory of Consumer Behavior
55(19)
Utility Theory
56(4)
Total Utility
56(2)
Marginal Utility
58(2)
Law of Diminishing Marginal Utility
60(1)
Indifference Curves
60(2)
Concept of Isoutility
60(1)
Marginal Rate of Substitution
61(1)
The Budget Constraint
62(5)
Summary
67(1)
Definition of Key Terms
68(1)
References
69(1)
Exercises
69(5)
Consumer Equilibrium and Market Demand
74(26)
Conditions for Consumer Equilibrium
75(2)
Changes in Equilibrium
77(5)
Changes in Product Price
77(3)
Changes in Other Demand Determinants
80(2)
The Law of Demand
82(3)
Market Demand
82(2)
Interpretation of Market Demand
84(1)
Tastes and Preferences
85(4)
Composition of the Population
86(1)
Attitudes toward Nutrition and Health
86(1)
Food Safety
86(1)
Lifestyles
87(1)
Technological Forces
88(1)
Advertising
88(1)
Consumer Surplus
89(1)
Summary
90(1)
Definition of Key Terms
91(1)
References
92(1)
Advanced Topics
92(1)
Extension of Conceptual Framework
92(1)
Exercises
93(7)
Measurement and Interpretation of Elasticities
100(21)
Own-Price Elasticity of Demand
101(4)
Income Elasticity of Demand
105(1)
Cross-Price Elasticity of Demand
106(1)
Other General Properties
107(9)
Some Real-World Examples
111(3)
Applicability of Demand Elasticities
114(2)
Summary
116(1)
Definition of Key Terms
117(1)
References
117(1)
Exercises
118(3)
PART III Business Behavior and Market Equilibrium121(146)
Assessing Business Performance
123(18)
Annual Business Reports
126(7)
Business Balance Sheets
126(2)
Business Income Statements
128(2)
Use in Business Planning
130(3)
Cost of Doing Business
133(2)
Explicity versus Implicit Costs
133(1)
Costs in Short Run versus Long Run
134(1)
Measuring Business Revenue
135(1)
Assessing Profit
136(1)
The Accountant versus the Economist
136(1)
Why the Fuss over Profit?
137(1)
What Lies Ahead?
137(1)
Summary
138(1)
Definition of Key Terms
139(1)
References
140(1)
Exercises
140(1)
Introduction to Production and Resource Use
141(31)
Conditions for Perfect Competition
142(1)
Classification of Inputs
143(1)
Land
143(1)
Labor
143(1)
Capital
143(1)
Management
144(1)
Important Production Relationships
144(7)
The Production Function
144(1)
Total Physical Product Curve
145(1)
Marginal Physical Product Curve
146(2)
Average Physical Product Curve
148(1)
Stages of Production
149(2)
Assessing Short-Run Business Costs
151(4)
Total Costs and the TPP Curve
151(3)
Average Costs and the APP Curve
154(1)
Marginal Costs and the MPP Curve
154(1)
Economics of Short-Run Decisions
155(7)
Marginal and Average Revenue
155(1)
Level of Output: MC = MR
156(3)
Level of Resource Use: MVP = MIC
159(1)
A Real-World Application
160(2)
What Lies Ahead?
162(1)
Summary
163(1)
Definition of Key Terms
164(3)
Exercises
167(5)
Economics of Input Substitution
172(25)
Concept and Measurement of Isoquants
173(4)
Rate of Technical Substitution
174(2)
A Case Example
176(1)
The Iso-Cost Line
177(2)
Least-Cost Use of Inputs for a Given Output
179(3)
Short-Run Least-Cost Input Use
179(2)
Effects of input Price Changes
181(1)
Least-Cost Input Use for a Given Budget
182(1)
Long-Run Expansion of Input Use
183(4)
Long-Run Average Costs
184(1)
The Long-Run Planning Curve
185(2)
Economics of a Business Expansion
187(3)
Capital Variable in the Long Run
188(2)
Expansion Path through Isoquants
190(1)
Summary
191(1)
Definition of Key Terms
191(1)
Advanced Topic
192(1)
References
193(1)
Exercises
193(4)
Economics of Product Substitution
197(15)
Concept and Measurement of the Production Possibilities Frontier
198(3)
Production Possibilities Frontier
198(1)
Product Substitution
198(3)
Concept and Measurement of the Iso-Revenue Line
201(2)
Profit-Maximizing Combination of Products
203(3)
Choice of Products in the Short Run
204(1)
Effects of Change in Product Prices
205(1)
Long-Run Expansion of Production
206(2)
Capital variable in the Long Run
206(1)
Expansion of Production Possibilities Frontier
207(1)
Summary
208(1)
Definition of Key Terms
208(1)
Exercises
208(4)
Market Equilibrium and Product Price: Perfect Competition
212(19)
Derivation of the Market Supply Curve
213(3)
Firm Supply Curve
213(1)
Market Supply Curve
214(1)
Own-Price Elasticity of Supply
215(1)
Producer Surplus
216(1)
Market Equilibrium under Perfect Competition
216(6)
Market Equilibrium
217(2)
Total Economic Surplus
219(2)
Applicability to Policy Analysis
221(1)
Adjustments to Market Equilibrium
222(2)
Market Disequilibrium
222(1)
Length of Adjustment Period
223(1)
Cobweb Adjustment Cycle
224(1)
Summary
224(2)
Definition of Key Terms
226(1)
Exercises
227(4)
Market Equilibrium and Product Price: Imperfect Competition
231(36)
Market Structure Characteristics
232(3)
Number of Firms and Size Distribution
232(1)
Product Differentiation
233(1)
Barriers to Entry
233(1)
Economic Environment
234(1)
Classification of Firms
235(1)
Imperfect Competition in Selling
235(13)
Monopolistic Competition
236(4)
Oligopoly
240(4)
Monopoly
244(2)
Comparison of Alternative Market Structures
246(1)
Welfare Effects of Imperfect Competition
246(2)
Imperfect Competition in Buying
248(4)
Monopsony
248(4)
Oligopsony and Monopsonistic Competition
252(1)
Market Structures in Livestock Industry
252(2)
Governmental Regulatory Measures
254(6)
Legislative Acts
254(3)
Ceiling Price
257(1)
Lump-Sum Tax
258(1)
Minimum Price
259(1)
Summary
260(1)
Definition of Key Terms
260(1)
References
261(1)
Exercises
262(5)
PART IV Government in the Food and Fiber Industry267(54)
Government Intervention in Agriculture
269(25)
Rationale for Government Intervention
270(1)
Farm Economic Issues
271(7)
Defining the Farm Problem
271(3)
Forms of Government Intervention
274(3)
Food Safety
277(1)
Consumer Issues
278(3)
Adequate and Cheap Food Supply
278(1)
Nutrition and Health
278(1)
Food Subsidies
278(1)
Rural Communities
279(2)
Resource Issues
281(6)
Soil Erosion and Land Use
281(1)
Adequacy of Water Supply
282(2)
Hired Farm Labor
284(1)
Energy
285(2)
International Issues
287(2)
Adequacy of World Food Supply
287(1)
Movement toward Free Trade
288(1)
What Lies Ahead?
289(1)
Summary
290(1)
Definition of Key Terms
291(2)
References
293(1)
Supporting Farm Prices and Incomes
294(27)
Price and Income Support Mechanisms
296(9)
Loan Rate Mechanism
296(2)
Set-Aside Mechanism
298(3)
Target Price Mechanism
301(1)
Conservation Reserve Mechanism
302(1)
Commodities Covered by Government Programs
303(2)
Phasing Out of Supply Management
305(2)
Domestic Demand Expansion Programs
307(1)
Importance of Export Demand
308(6)
Calculating Total Demand Elasticity
310(1)
Impact of Rising Export Demand
310(1)
Impact on Farm Revenue of Wheat Producers
311(2)
Implications for Policy
313(1)
Summary
314(1)
Definition of Key Terms
315(2)
References
317(1)
Exercises
317(4)
PART V Macroeconomics of Agriculture321(131)
Product Markets and National Output
323(28)
Circular Flow of Payments
324(3)
Barter Economy
324(1)
Monetary Economy
325(2)
Composition and Measurement of Gross Domestic Product
327(3)
Consumption, Savings, and Investment
330(10)
Determinants of Planned Consumption
331(3)
Determinants of Planned Saving
334(2)
Determinants of Planned Investment
336(4)
Equilibrium National Income and Output
340(6)
Aggregate Expenditures
340(1)
The Keynesian Cross
341(1)
Deriving Aggregate Demand Curve
341(1)
Aggregate Supply and Full Employment
342(3)
Recessionary and Inflationary Gaps
345(1)
What Lies Ahead?
346(1)
Summary
346(2)
Definition of Key Terms
348(1)
References
349(1)
Exercises
350(1)
Consequences of Business Fluctuations
351(23)
Fluctuations in Business Activity
352(2)
Nature of Business Fluctuations
352(1)
Indicators of Economic Activity
353(1)
Consequences of Business Fluctuations
354(11)
Unemployment
355(2)
Inflation
357(7)
Short-Run Phillips Curve
364(1)
Macroeconomic Policy Options
365(4)
Laissez-Faire Macroeconomic Policy
365(1)
Demand-Oriented Macroeconomic Policy
366(2)
Supply-Oriented Macroeconomic Policy
368(1)
Summary
369(1)
Definition of Key Terms
370(1)
References
371(1)
Exercises
372(2)
Money, Money Markets, and Monetary Policy
374(25)
Characteristics of Money
375(2)
Functions of Money
375(1)
Money versus Near Monies
376(1)
Backing of Money
376(1)
Federal Reserve System
377(5)
Organization of the Federal Reserve System
377(2)
Functions of the Federal Reserve System
379(2)
Monetary Policy Instruments
381(1)
Changing the Money Supply
382(5)
Creation of Deposits
382(3)
Monetary Policy and the Money Supply
385(2)
Money Market Equilibrium
387(2)
Demand for Money
387(2)
Equilibrium Conditions
389(1)
Effects of Monetary Policy on the Economy
389(6)
Transmission of Policy
389(1)
Combating Recessionary Gaps
390(2)
Combating Inflationary Gaps
392(1)
Combating Stagflation
393(1)
Microeconomic Perspectives
393(1)
Potential Problems in Policy Implementation
394(1)
Summary
395(1)
Definition of Key Terms
396(1)
References
397(1)
Exercises
397(2)
Fiscal Policy and Budget Deficits
399(23)
The Federal Budget
400(4)
Federal Expenditures
400(2)
Federal Receipts
402(1)
Budget Deficit
402(2)
The National Debt
404(5)
National Debt and GDP
405(1)
Interest Payments and GDP
406(1)
Ownership of National Debt
407(1)
Burdening Future Generations?
407(2)
Fiscal Policy Options
409(8)
Automatic Policy Instruments
409(1)
Discretionary Policy Instruments
410(2)
Fiscal Policy and Aggregate Demand
412(1)
Combating Recessionary Gaps
413(2)
Combating Inflationary Gaps
415(1)
Combating Stagflation
416(1)
Difficulties in Policy Implementation
416(1)
What Lies Ahead?
417(1)
Summary
417(1)
Definition of Key Terms
418(1)
References
419(1)
Exercises
420(2)
Macroeconomic Policy and Agriculture
422(30)
Impacts of Policy Actions on the General Economy
423(3)
Market Interest Rates
423(1)
Real GDP and Disposable Income
423(1)
Unemployment Rate
424(1)
Inflation Rate
425(1)
Foreign Exchange Rate
425(1)
Impacts of Policy Actions on Agriculture
426(7)
Farm Product Prices
426(2)
Farm Input Prices
428(1)
Farm Interest Rates
429(1)
Net Farm Income
430(2)
Farmland Prices
432(1)
A Brief History Lesson
433(15)
The 1970s: A Decade of Expansion
430(6)
The 1980s: A Decade of Contraction
436(6)
The 1990s: A Decade of Change
442(6)
Summary
448(1)
Definition of Key Terms
449(1)
References
449(3)
PART VI International Agricultural Trade452(117)
Agriculture and International Trade
453(27)
Growth and Instability in Agricultural Trade
454(4)
Export Boom and Bust
455(1)
Moves toward Trade Liberalization
456(2)
The Importance of Agricultural Trade
458(4)
Increased Export Dependence
458(1)
Greater Dependence on Imports
458(2)
Farm and Nonfarm Impacts of Exports
460(2)
The Composition of Agricultural Trade
462(3)
The Role of Agricultural Exports
462(1)
The Role of Agricultural Imports
463(2)
Direction of U.S. Agricultural Trade
465(6)
Emerging Export Market Trends
465(2)
Key Regional Markets
467(2)
Major Import Suppliers
469(2)
U.S. Agricultural Trade Performance
471(4)
The Balance of Trade
474(1)
Summary
475(1)
Definition of Key Terms
476(1)
References
477(1)
Exercises
478(2)
Exchange Rates and Agricultural Trade
480(30)
Exchange Rates and the Foreign Exchange Market
481(4)
Exchange Rates Defined
481(1)
The Foreign Exchange Market
482(3)
The Balance of Payments
485(5)
The Current Account
485(1)
The Private Capital Account
486(1)
Official Settlements Account
486(1)
The United States as a Debtor Nation
486(4)
The International Monetary System
490(4)
The Gold Standard and the Interwar Years
490(1)
The Bretton Woods System
490(2)
The Present International Monetary System
492(2)
The European Monetary System
494(1)
The European Union and the European Monetary System
494(1)
Exchange Rate Determination
495(5)
Demand and Supply of Foreign Currencies
495(1)
Relative Interest Rates
496(2)
Changes in Relative Prices
498(1)
Balance of Trade Impacts
498(2)
The Role of Expectations
500(1)
Exchange Rates and U.S. Agricultural Trade
500(3)
Exchange Rate Indices
502(1)
Exchange Rate Impacts on Prices
502(1)
Considerations for Policy Coordination
503(2)
Macroeconomic Policy Coordination
503(1)
Domestic Agricultural Policy Coordination
504(1)
Summary
505(2)
Definition of Key Terms
507(1)
References
508(1)
Exercises
508(2)
Why Nations Trade
510(15)
Why Trade?
510(2)
Absolute Advantage
512(6)
Comparative Advantage
514(2)
Factors Affecting Comparative Advantage
516(1)
Comparative Advantage and Competitive Advantage
516(2)
Gains from Trade
518(3)
The Importance of Exchange and Specialization
518(1)
Distribution of the Gains from Tirade
519(2)
Summary
521(1)
Definition of Key Terms
522(1)
References
522(1)
Exercises
523(2)
Agricultural Trade Policy
525(27)
Trade and Welfare
526(4)
Autarky or the Closed Economy
526(1)
Trade and Partial Equilibrium
527(2)
Welfare Gains from Trade
529(1)
Why Restrict Trade?
530(2)
Protectionism in Agriculture
530(1)
Arguments against Trade
531(1)
Trade Restrictions
532(10)
Import Policies
533(6)
Domestic Agriculture and Food Policies
539(1)
Export Policies
540(2)
Agricultural Trade Policy Making
542(4)
The General Agreement on Tariffs and Trade
542(2)
The United Nations Conference on Trade and Development
544(1)
U.S. Agricultural Trade Policy Formulation
545(1)
Summary
546(2)
Definition of Key Terms
548(1)
References
549(1)
Exercises
550(2)
Emerging Issues in Agricultural Trade: The Formation of Preferential Trading Arrangements
552(17)
The Importance of Preferential Trading Arrangements
553(1)
Forms of Economic Integration
554(1)
Reasons for Preferential Trading Arrangements
555(2)
Preferential Trading Arrangements and the GATT
555(1)
Counter Economic and Political Power in Other Parts of the World
556(1)
Reduce Side Effects
557(1)
Foster Political Stability and Economic Prosperity
557(4)
Do Preferential Trading Arrangements Create or Divert Trade?
557(1)
Static Effects
558(3)
Dynamic Effects
561(1)
Provisions of the North American Free Trade Agreement
562(2)
Summary
564(1)
Definition of Key Terms
565(1)
References
566(1)
Edercises
566(3)
Index569

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