Intro to Food and Resource Economics Week Two
Intro to Food and Resource Economics Week Two 2713
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This 12 page Class Notes was uploaded by Taylor Baker on Saturday August 27, 2016. The Class Notes belongs to 2713 at Mississippi State University taught by Danny Barefield in Fall 2016. Since its upload, it has received 75 views. For similar materials see Intro to Food & Resource Econ in agricultural economics at Mississippi State University.
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Date Created: 08/27/16
Week Two Notes: 8/22 - 8/26/16 etofetiispotdr•T usually applies to countries. (like the countries economy). emxeot•tA ◦ A country produces computers and wheat. ◦ The only resource is labor; which is measured in hours of work. ◦ There is 50,000 hours of labor 01rurrtmc1nc•P hours of labor. tewolhbeonc•P requires 10 hours of labor. (The above graphs are from the instructor notes to further your understanding of this example.) scyntooetihagaopl•T of the x axis in terms of the y axis. (assuming wheat is on the x axis and computers are on the y axis) goancopsituchtan•A the production possibilities frontier all of the resources that are available to that country and being used - in other words the country is being efficient. Opportunity Cost: ogaotociuopotthtb•R is what we have to give up to get it. (need to know this definition!) tmr(euoceoafoo•T textbook example above) is 10 bushels of wheat. .0iahwoeubeoafoo•T computers. silbspniuopaipga•W frontier, the opportunity cost at any given point is the slope. Shape the Production Possibilities Frontier etoeashtrwlre•I production possibilities frontier would likely be bowed because the opportunity cost of the good increases as we pull resources with a lower comparative advantage away from the production of other goods. Bowed Production Possibilities Frontier and Opportunity Cost lmxea•U ◦ As resources shift from cheese to mountain bikes: etofetiiopocdreT becomes steeper ntumotcyitopeT bikes increases. ◦ The specialization of labor brings about comparative advantage. ◦ Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer. (graph from instructor notes to further understand the example) We increase the production possibilities frontier by increasing resources. hbiOniapituiwnaepxE County will be devoted to developing a mountain bike production cluster. (graph from instructor notes to further understand the example) Branches of economics: sincoiM : is the study of how households and firms make decisions and interact in specific markets. ◦ (The study of economy as a whole) ◦ Sub-disciplines include - ag, economics, regional economics, health economics, sports economics, etc. sincoaM : is the study of economy-wide events such as the federal deficit, the unemployment rate, and domestic economic policies. ◦ Microeconomics usually takes the macroeconomic events as a given. The economist as Policy Advisor oegfottsiniS how the world is. (tell how things really are). ◦ Scientists use positive statements. igkmsoeubinceT" Mississippi was $6.8 billion in 2014." .ogamswaonedvtoP rsvaclP (or implementers) try to figure out how the world ought to be. ◦ Policy makers use normative statements. W" should reduce the burden of smoking on Mississippi's business by increasing public health dollars. otntlopecdehihcfnF smoke less than less educated people. Why do economists disagree? (even with themselves) eoaofeayauTraHeieP armed economist teegsdofoarimoT ◦ Different scientific judgments regarding “what is”, including the information that is included in a model ◦ Different values as to “what should be.” Example: To what extent should the government be involved in redistributing wealth? Ideas for which most economists agree and the percentage agreeing natnuqtsuernrnoiicA quality of housing available. (93%) tnieloseaSeiUhT agriculture subsidies. (85%) nanfyrcSacSewbpghT expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%) nmaeyleuearieawmnmA young and unskilled workers. (79%) Chapter 3: Interdependence and the Gains from Trade (the above graph is from instructor notes to further understand the chapter) ◦ The United States has an absolute advantage in producing both wheat and computers. ◦ Absolute advantage is the ability to produce a good using fewer inputs than another producer. ◦ Example: Japan has an absolute advantage for making computers according to the graph above. ◦ Does this mean that the US and Japan should not trade? etgtsabertlhsetoN they can both get what they need. egactucein,atthiW what they need for demand. ◦ Example: Suppose that the United States needs 270 computers and 2,700 tons of wheat and Japan needs 130 computers and 700 tons of wheat. Without trade are either of these combinations a possibility? (the above graph is from instructor notes to further understand the example) idmdrhtucboniesahT more than they have the resources for without trade. nturphtodtos•I possibilities frontier and therefore is not possible without trade. euoaetahpJ,atytnh•S advantage for computers, and the U.S. has a better advantage for wheat; so Japan will use all of its resources to make 240 computers, and the U.S will produce all of the 3,400 tons of wheat; and because the U.S. had resources leftover, it will produce the remaining 160 computers as well. ytoccedtyhthwlailA will get what it desired in the first place. The U.S will trade 700 tons of wheat for 110 computers and then the countries will be equal. .dtde•W Chapter 4: The Market Forces of Supply and Demand !RTHCNRPIRVAIRPHCHT niipocaseaM ◦ A market is a group of buyers and sellers of a particular product. ◦ A competitive market is a market with many buyers and sellers. Each buyer and seller has a negligible effect on price. ◦ In a perfectly competitive market: lceeaermhtido•A the same. (you are buying and selling basically the same thing) easlesasebfobu•T so numerous that no one entity can affect market price - each buyer and each seller is a price taker. vttmcycfepfyve•W markets today. d•D ◦ The quantity demanded of any good is the amount of the good that buyers are willing and able to purchase at specific prices. ◦ The law of demand (demand) is the claim that the quantity demanded of a good falls when the price of the good rises, other things being equal (ceterus paribus). .slubyssrcrpt•W .rmubyslfcrpt•W sbrPu•C means everything else being equal. eueSd•D ◦ Demand schedule is a table that shows the relationship between a goods price and the quantity demanded. aietlofnedhtl•E non-finals week. (the above graph and table are from instructor notes to further understand the example.) tpdaldcsnedhtath•oY the information into a graph for better understanding. Individual Demand vs. Market Demand afoosipaeuir•hT individual’s demand for lattes htiermhtienmdttu•hT sum of quantities demanded by all buyers at each price htirybwtnoraets•uS latte market (the above table is from instructor notes to further understand the example.) enmdetnuqtgne•Q (the above graph is from instructor notes to further understand the example) klklduwieathtago•I this. Demand Curve • Demand curve shows how price affects quantity demanded (ceterus paribus).
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