#CH1: Intro to Econ Analysis of Agri Markets

Question 1

What is Economics?

Answer 1

The study of human beings’ behavior in producing, distributing, and consuming material goods and services in a world of scarce resources.

Question 2

What is management?

Answer 2

The science of organizing and allocating a firm’s scarce resources to achieve its desired objectives.

Question 3

What is the managerial economics? (Kinh tế học quản trị)

Answer 3

The use of economic analysis to make business decisions involving the best use of an organization’s scare resources.

Question 4

What is the relationship of managerial economics to other business disciplines? (XXX)

Answer 4

• Marketing: demand, price elasticity
• Finance: capital budgeting, breakeven analysis, opportunity cost, value-added
• Managerial science: linear programming, regression analysis, forecasting
• Strategy: types of competition, structure-conduct performance analysis (Phân tích cơ cấu - thực thi - kết quả???)
• Managerial accounting (Kế toán quản trị): relevant cost, breakeven analysis, incremental cost analysis (chi phí gia tăng), opportunity cost

Question 5

What are the economic conditions in a particular market?

Answer 5

• Market structure: Perfect competition/ Monopolistic competition/ Oligopoly/ Monopoly
• Supply & Demand
• Technology
• Government regulations
• International dimensions
• Future conditions
• Macroeconomic factors
  ==> Example:
  + Vietnam coffee: After 86’s Doi Moi policy => Production & Export increase => Among top 5 in the world
  + Ukraine vs Russia war: Price of petrol and grains increase ==> Affect many countries in the world

Question 6

How do we know if a firm should be in a business

Answer 6

A firm should be in a business if it can answer 3 Qs:

• What product should we be selling?
• What price should we be selling our product?
• At what output level?

Question 7

How can we maintain a competitive advantage over other firms?

Answer 7

• Low cost-leader
• Product differentiation
• Finding a niche market
• Outsourcing (thuê ngoài), alliances (liên minh), mergers (sát nhập)
• Through an internationalization of our product or process
  (#franchise?)

Question 8

What are the risks involved in a business?

Answer 8

• Shifts in demand and/or supply conditions
• Technology changes in the industry
• The effect of competition
• Changing interest rates and/or inflation rates
• Exchange rates (for comp. in international trade)
• Political risks (for firms with foreign operations, e.g. Chelsea - which was owned by Russian was sanctioned by UK government due to the war between Ukraine and Russia)

Question 9

What is called “risk”?

Answer 9

Risk is the chance that actual future outcomes will differ from those expected

Question 10

What does “economics of an agri-business” mean?

Answer 10

• The economics of an agri-business refers to the KEY FACTORS that affect the FIRM’S ABILITY to EARN an ACCEPTABLE RATE OF RETURN on its OWNERS’ INVESTMENT.
• 3 most important factors: COMPETITION, TECHNOLOGY & CUSTOMERS.

Question 11

Give examples of 2 different businesses: success vs failure?

Answer 11

1. KODAK
   - struggle to transition from chemical-based film to digital imaging
   - responded by developing strong cash flows in new product range: printers
   - now back to struggling because the product range was not enough
2. WESTERN UNION
   - began over 100 years ago
   - huge changes in technology
   - to survive in the new market place the company branched out
   - now a global company with global reach and an internet presence

Question 12

What is MICROECONOMICS?

Answer 12

Microeconomics is the study of individual consumers and producers in specific markets, especially:

• supply & demand
• pricing of output
• production process
• cost structure
• distribution of income

Question 13

What is MACROECONOMICS?

Question 14

What is MACROECONOMICS?

Answer 14

Macroeconomics is the study of aggregate economy, especially:

• national output (GDP) # GNP
• unemployment
• inflation
• fiscal and monetary policies
• trade and fiance among nations

Question 15

What are resources?

Answer 15

Resources are inputs (factors) of production, notably: LAND, LABOR, CAPITAL, ENTREPRENEURSHIP

Question 16

What do “scarcity” and “opportunity cost” mean?

Answer 16

• Scarcity is the condition in which resources are not available to satisfy all the needs and wants of a specified group of people.
• Opportunity cost is the amount (or subject value) that must be sacrificed in choosing one activity over the next best alternative.

Question 17

How do we make “ALLOCATION DECISIONS”

Answer 17

Allocation decisions must be made because of scarcity. Including 3 choices:

• WHAT should be produced?
• HOW should it be produced?
• FOR WHOM should be produced

Question 18

When making Economic decisions of the Firm, 3 factors we should consider:

Answer 18

• WHAT - begin or stop providing goods/services (production)
• HOW - hiring, staffing, capital budgeting (resourcing)
• FOR WHOM - target the customers most likely to purchase (marketing)

Question 19

What are “Entrepreneurship” and “Management”?

Answer 19

Entrepreneurship is the willingness to take certain risks in the pursuit of goals

Management is the ability to organize resources and administer tasks to achieve objectives.