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Agriculture Economics and the American Economy

Agriculture Economics and the American Economy. Economics. Study of how individuals and countries decide how to use scarce resources to fulfill their wants. Scarcity. Situation where there are not enough resources available to satisfy people’s needs or wants. Resources.

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Agriculture Economics and the American Economy

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  1. Agriculture Economics and the American Economy

  2. Economics • Study of how individuals and countries decide how to use scarce resources to fulfill their wants

  3. Scarcity • Situation where there are not enough resources available to satisfy people’s needs or wants

  4. Resources • Inputs that society uses to produce outputs

  5. Types of Resources • Natural Resources-Land • Human Resources-Labor • Manufactured Resources-Capital • Entrepreneurship-Management

  6. Three Basic Economic Questions • What goods should be produced, and how much of each? • How should these goods be produced? • Who should get what and how much?

  7. Simplified economic questions • What type of pie to produce? • Type and number • What combination of ingredients to use? • How to divide the pie?

  8. Types of economic systems • Traditional • Capitalism • Fascism • Socialism • Communism • Mixed

  9. Traditional economic system • Answers economic questions according to tradition • Do things “the way they have always been done” • Very limited parts of Asia, Africa, Middle East, Latin America

  10. Capitalism • Individuals have free reign over their time and resources • Self-regulating system • Competition is driving force in every economic activity and decision • Free markets determine all decisions

  11. Socialism • Basis is public ownership of productive resources • Government directs all decisions regarding utilization of resources • Society as a whole owns industry and controls all property for mutual benefit of all • Gov’t has control over all economic effort • Competition is eliminated

  12. Fascism • Individual ownership • Gov’t determines all activity • Opposition to gov’t suppressed, critics censored, individual freedom may be denied

  13. Communism • Single political party or body controls government-owned means of production • Production is organized by a centralized economic plan • Everyone contributes according to ability • Distribution is made according to need

  14. Mixed • What actually exists in most countries

  15. American economy • Usually referred to as capitalistic • Actually mixed system • Usually called a free enterprise system

  16. Free enterprise system • Little or no government control • Freedom of enterprise • Freedom of choice • The right to own private property • Profit incentive • competition

  17. Role of government • Founders-national defense and keeping the peace • Recently increased significantly • Regulates quality of food and drugs • Monitors nation’s money and banking system • Safety in workplace • Protect environment • Minimum wage

  18. Freedom of enterprise • Individuals own and make decisions

  19. Freedom of choice • Success or failure of a good or service depends on individuals freely choosing what they want

  20. Private property • Owner makes decisions about property

  21. Profit incentive • Guides business decisions

  22. Competition • Win more business by offering lower prices or better quality than competing businesses

  23. Agricultural Economics • Application of economic concepts to agricultural problems • Economics-basic science • Agricultural economics-applied science • Began as farm economics • Cost-price squeeze of early 1900’s • Increased prices of inputs • Lower prices for farm products

  24. Agricultural Economics specialty areas • Production economics(farm management) • Agricultural finance • Rural development • Price analysis • Agricultural policy • International development • Marketing • Usually specialize in a certain area • Grain, livestock, fruit and vegetable

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