212-202 Agricultural Economics and Business

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Objectives:

To provide students with an understanding of the basic principles of modern economics, finance and management, in the context of the technological environment and the market economy within which agricultural production, processing and marketing firms operate.

After completing this subject students will be able to:

Apply: economic ways of thinking and techniques of analysis to private and public decisions about uses of resources;

Understand: the nature of supply and demand of agricultural commodities and products and the implications for prices and profits; the concept of the production function and the relationship to the costs of producing agricultural products; resource allocation by competition in markets; sources of market failure and the economic concept of externalities as applied to use of natural resources; the concept of comparative advantage and the implications for location of production and for trade; the role of capital markets and be able to analyse and evaluate capital investment by private businesses and the public; the management role and business profit, liquidity, solvency and growth; the marketing systems of the major agricultural commodities and will appreciate the role of agriculture in the economy and the consequences of economic growth for agriculture.

Content:

Introduction to basic concepts of economics: scarcity, demand, supply, competition and resource allocation. Demand, price, elasticity and total revenue. Supply, production and cost relationships. Marginal analysis and profit. Perfect competition and imperfect competition. Markets, externalities and using and sustaining natural resources. Concept of comparative advantage and trade. Capital markets and investment analysis. Private and public investment criteria. Basic principles of business management. Business profit, borrowing, business growth and risk management. Marketing of agricultural commodities. Economic growth and agriculture.

Assessment:

Prescribed Texts:

• McTaggert, D. et.al., Economics, Addison-Wesley 1996.
• Cramer G L and Jensen C W, Agricultural Economics and Agribusiness, John Wiley and Sons 3rd ed. 1990.