Agricultural Economics Handout PDF

# Agricultural Economics ## Manila Review Institute, Inc. Established in 1974 ### Introduction to Economics * It is the study of allocation of scarce resources to meet the unlimited human wants. ### Economics 1. **Micro-economics** * It studies individuals and business decisions. 2. **Ma...

# Agricultural Economics ## Manila Review Institute, Inc. Established in 1974 ### Introduction to Economics * It is the study of allocation of scarce resources to meet the unlimited human wants. ### Economics 1. **Micro-economics** * It studies individuals and business decisions. 2. **Macro-economics** * It analyzes the decisions made by the countries and the governments. 3. **Positive Economics** * It describes and explains various economic phenomena. 4. **Normative Economics** * It focuses on the value of economic fairness, or what the company "should be" or "ought to be". ### Agricultural Economics * It is the study of the allocation, distribution, and utilization of the resources used, along with the commodities produced by farming. ### Economics 1. **Scarcity** * The condition of having to choose among alternatives. 2. **Scarce Good** * Is one for which the choice of one alternative use of the good requires that another is given up. 3. **Free Good** * Is one for which the choice of one use does not require that we give up another. 4. **Opportunity Cost** * Is the value of the best alternative forgone in making any choice. ### Basic Economic Problems * What to produce? * How much to produce? * When to produce? * How to produce? * For whom to produce? ### Major Factors of Production * **Land** * **Labor** * **Capital** ### Entrepreneur * It refers to a person who brings other factors of production in one place. ### Theory of Cost 1. **Fixed Costs** * A cost that doesn't change as production is increased or decreased. 2. **Variable Costs** * A cost that varies with output 3. **Opportunity Costs** * Is equal to foregone income 4. **Social Costs** * Expenses intended to protect society and the environment. 5. **Conventional Costs** * Cost items used in the economic analysis of the business operation. ### Kinds of Conventional Cost 1. **Total Costs** * The sum of fixed costs and variable costs at a particular level of output. 2. **Marginal Costs** * The cost of one more unit of output. 3. **Average Costs** * Total costs divided by the level of output. ### Supply and Demand * The image depicts a graph showing the relationship between supply and demand. The x-axis represents the quantity, and the y-axis represents the price. The graph shows that the equilibrium point is where supply and demand intersect. ### Demand * It is an economic concept that relates to a consumer's desire to purchase goods and services and willingness to pay a specific price for them. ### Law of Demand * Other things being equal (ceteris paribus), when the price of a commodity falls, the quantity demanded of that commodity increases. ### Supply * It is the quantity of a certain commodity that is offered for sale at a certain price at a given place and time. It represents how much the market can offer. ### Law of Supply * The supply of the commodity varies directly as the price of the commodity, though not proportionally. ### Equilibrium * It is achieved at the price where demanded and supplied are equal. ### Disequilibrium * In a market setting, disequilibrium occurs when the quantity supplied is not equal to the quantity demanded. ### Elasticity * It refers to the measure of the responsiveness of quality demanded or quantity supplied to one of its determinants. ### Utility * It refers to the total satisfaction or benefit from consuming a good or service. ### International Trade * Trade between people or firms in different countries. ### Duty * A tax levied on import. ### Tariff * A duty or tax imposed on an import or an export. A schedule of changes of a business, especially on a public utility. ### Value Added Tax * An indirect tax levied at the time of exchange of goods and services from primarily production to consumption. ### Thank You For Attention * Agricultural Economics * See You Next Time