Lesson 2 Fundamentals Of Agricultural Economics Flashcards
An applied field of science wherein the principles of choice are applied to the use of capital, labor, land, and management resources in the farming industries.
Agricultural economics
What are the scope of agricultural economics?
-policy analysis
-impact studies
-benefit-cost analysis
-natural resource
Economic development in rural areas
A Republic in conducting scientific research and investigation?
Republic Act No. 4059
Importance of agriculture?
-Provision of food
-Provision of jobs
-Government revenue
-Trading and foreign exchange earning
-provision of market for other industries
-Education and training
Top Philippine food export
Tuna
Banana
Mango
Pineapple
Coffee
Coconut
All accredited farmers and fisherfolk enterprises may be exempt from income tax on income derived from the enterprise provided they are registered as BMBEs.
Exemption from Income Tax
BMBEs stand for ______.
Barangay Micro-Business Enterprises
- applies the principles front general economics to the agricultural industry.
- it is an applied of science, static and dynamic, and is a mix of science and art.
Nature of Agricultural Economics
Oldest of arts and the queen of all social science.
Art
Role of agricultural economists in microeconomics level.
Production economist
Market economist
Financial economist
Resource economist
Examine how firms decide the optimal combination of inputs (labor,capital, and raw materials) to produce goods and services.
Production economist
Focus on the flow of goods and services in the market channels and determine prices,
Market economist
Concern with the issues related to financing of business.
Financial economist
Used and preservation of natural resources.
Resource economist
- are abundant in nature
-no price attached
Free products
Sunshine,sea water,air we breath are example of _______.
Free products
Goods and services that are relatively scarce, and transferrable to others.
Economic products
-Commodities and/products that an individual can use
-concret and tangible
Goods
-Work performed for someone else
-manual work such as carpentry, tailoring, etc.
Services
What are the type of goods
Consumer goods
Capital goods
Durable goods
Non-durable goods
-Used by individuals
-food, clothing, medicine, etc.
Consumer goods
-Used to produce other goods
-eg. Machineries, tractors, threshers
Capital goods
-Last for less than three(3) years
- e.g computers, cellphones, shoes
Non-durable goods
-will last for three (3) years or more
-buildings, trucks, etc.
Durable goods
-individuals who used goods and services to satisfy their needs and wants
-individuals or entities that purchase products and avail services offered to them.
Consumers
-Something with worth that can be expressed in monetary terms like peso or dollars.
-determined by the price someone would pay for something
Value
What are the basic concepts and principles of agricultural economics?
- Value
- Utility
- Capital
- Income
- Wealth
- Welfare
- Opportunity cost
- Economic efficiency
- Scarcity and choice
In order for something to have value, it has to be scarce.
Paradox value
-The capacity to be useful to someone
- not measurable and can be different from one person to the next
- the satisfaction that one achieves from consuming goods/services.
Utility
Additional satisfaction one gets from each unit consumption.
Marginal utility
-anything which has value
- the sum of economic products that are tangible, scarce, useful, and transferable from one person to another.
Wealth
- part of the wealth of individuals and of communities other than money
- used to assist in the production of further wealth
Capital
Tools, implements, machinery,seed, raw materials, transport facilities such as roads, railways, ships etc. are examples of ___________?
Capital
- money derived from property or assets
- income generated from rented house, revenue generated from cultivating own farmland.
Income
-Wealth is the means and welfare is the end
- generally derived from wealth
- In form of mental, moral, and physical well-being of individual
Welfare
The value of the next-highest-valued alternative use of a source
Opportunity cost
-Condition where each and every resource is allocated optimally so that each person is served in the best possible way.
-measure of output obtained with a given of inputs with least amount of wastage
Economic efficiency
- requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible given scarce resources.
Scarcity and choice
What are the subject matter of economics?
- Consumption
- Production
- Exchange
- Distribution
- satisfaction of human needs and wants
- produced goods are consumed immediately or sometime in the future
- consumption represent using up of utilities
Consumption
A process when needs and wants are satisfied ?
Consumption
Creation of wealth, creation of utility, all activities which are undertaken to produce goods which satisfy human needs and wants.
Production
A process of extracting minerals from the earth’s crust; fishing from rivers, lakes and oceans; and growing trees.
Production
Transfer of goods, takes place among groups of individuals, countries, markets, regions, province etc.
- leads to increase in welfare of individuals through creation of higher utilities for goods and services.
Exchange
Refers to the sharing of wealth produced by community among the agents of production, proper distribution of wealth, and resources leading to development and economic welfare of the people in a nation
Distribution
Wealth is produced by the combination of ____, ____, ____, and ____.
Land, labour, capital and entrepreneurship
Wealth is distributed in the form of ____, _____, ______, and _____.
Rent, wages, interest and profits
Tools in Economic analyses
Economic model
Centeris paribus
Marginal analysis
Correlation and causation
Examining changes, and refers to an additional or incremental unit of something.
Marginal analysis
A simplified description of reality, designed to yield hypotheses about economic behavior that can be tested.
Economic models
-Tools in Economic analyses which means “everything else being equal”.
Centeris paribus
-used in economics to rule out the possibility of others factors changing.
Centeris paribus
Used in economics to rule out the possibility of other factors changing.
Centeris paribus
Refers to two events that share some sort of “mutual relationship” in a regular and predictable manner.
Correlation
Refers to two events in which there is a “ cause-and-effect relationship.
Causation
Two or more than two products are produced in the same production process.
Joint product
Occurs when one of the products produces an input used by the product.
Complementary products
If one product can be increased without increasing or decreasing the other product.
Supplementary productions
Increase in one product requires a reduction in the other.
Competitive relationships
Types of principles of combining enterprises:
Joint product
Complementary products
Supplementary production
Competitive relationships
As you increase production of one good, the opportunity cost to produce an additional unit of that good will increase.
Law of increasing opportunity cost
Types of law comparative advantage?
Comparative advantage
Absolute advantage
Advantage if he can produce the crops at a lower opportunity cost than another farmer.
Comparative advantage
If he can produce crops at a faster rate with the same amount of resources compared to another farmer.
Absolute advantage
What are the agricultural economics principles?
Law diminishing marginal returns
Law of equi-marginal returns
Law of substitution
Principles of combining enterprises
Law of increasing opportunity cost
Law of comparative advantage
