AG Chapter 1, 2, 3, and 4 Flashcards
`1Define economics
A social science concerned chiefly with description and analysis of the production, and consumption of goods and services.
Define agricultural economics
an applied social science that deals with how producers, consumers, and societies use scarce resources in the production, processing, marketing, and consumption of food and fiber products
Define scarcity
when supply of a source cannot meet demand
Characteristics of microeconomics
- factors that influence individual economic choices
- labor economics
- decisions of individual firms
- decisions of individual consumers
- decisions of individual households
- how demand and prices are determined in individual markets
Characteristics of macroeconomics
- The big picture
- inflation
- unemployment
- national output
- national income
- includes national, regional, and global economics
Define specialization
when an individual or a company specializes in doing one part of a task and relies on others to complete the other parts.
What is an example of specialization?
Kansas:
* surplus of wheat
* Shortage of oranges
* shortage of potatoes
Idaho:
* Surplus of potatoes
* Shortage of wheat
* Shortage of oranges
Florida:
* Surplus of oranges
* Shortage of wheat
* Shortage of potatoes
Explanation
- Kansas gives wheat to Idaho in exchange for potatoes.
- Idaho gives potatoes to Florida in exchange for oranges.
- Florida gives oranges to Kansas in exchange for wheat.
What is comparative advantage?
the ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals.
A _____________ gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.
What is opportunity cost?
the potential benefits that an individual, investor or business misses out on when choosing one alternative over another.
Define utility
the total satisfaction or benefit from consuming a good or service.
What is the formula for net profit?
total revenues - total expenses
What is the formula for revenue?
Quantity x prince
What is capitalism?
an economic system characterized by private ownership in which the free market alone controls the production of goods and services.
What are 3 basic characteristics of a socialist economy?
- state owns major factors of production
- central planners determine many of the basic processes
- there is an attempt to distribute income equally
What is communism?
all property is publicly owned and each person works and is paid according to their abilities and needs.
What is a mixed economy?
an economic system that has elements of traditional, command, and market economies.
What is socialism?
the economic system in which the people control production and distribution through the government and then the people share the profits.
Who is the founding father of economics? What was the name of his famous book?
Adam Smith and “Wealth of Nation”
Discretionary Income Formula
Gross income - taxes - essential expenses
Disposable Income Formula
gross annual income - financial obligations
Define disposable income
money left over from salary after all taxes paid
Define discretionary income
whats leftover after paying necessities out of your disposable income like rent, mortgage, health care and transportation
What does the Engel curve reveal
Engel’s Law is an economic theory that describes the
relationship between household income and a particular
good or service expenditures. It states that as family
income increases, the percentage of income spent
on food decreases.
What is productivity?
the relationship between the amount of outputs and amount of inputs needed to produce a product
Formula for productivity
output / input
define risk
the effect of uncertainty on objectives
why does the government give money to farmers?
Farm subsidies are government
financial benefits paid to the agriculture
industry that help reduce the risk
farmers endure from the weather,
commodities brokers, and
disruptions in demand.