1. AGEC 105 Introduction to Agricultural Economics
Dr. Oral Capps, Jr.

2. TA Information
Michael Nepveux Office: Phone: Office hours:
Jing Yi Office: AGLS 391 Phone: Office hours:

3. Baby Boomers vs. Millennials= = =

4. Baby Boomers vs. Millennials= =

5. Romer, David.
“Do Students Go to Class? Should They?”
Journal of Economic Perspectives
Summer 1993:
Attendance counts in economics courses indicates that absenteeism is rampant
About one-third of students are not in class
The difference in performance between a student who attends regularly and one who attends sporadically is about a full letter grade!

7. Justification for AGEC 105
-- The level of basic economic literacy among U.S. citizens is appalling according to a recent national survey conducted by the Gallup organization and the National Council on Economic Education

8. UNITS Introduction to the Field The Food & Fiber Industry
Understanding Consumer Behavior
Business Behavior & Market Equilibrium
Government in the Agricultural Sector
Macroeconomics of Agriculture
International Trade

9. What is your EQ? EQ = Economics Quotient
Similar to IQ (Intelligence Quotient)
Opportunity to Earn Additional (extra credit) Points

10. Do You Know? The current U.S. Secretary of Agriculture is ______.
On average, the U.S. farmer gets ______ cents from each dollar spent on food by consumers.
The current Commissioner of Agriculture of Texas is ______.
U.S. consumers spend about ______ percent of their disposable personal income on food.
20% of U.S. farmers produce _______% of U.S. agriculture output.
The magnitude of the U.S. federal budget deficit currently is $___________.
The magnitude of the U.S. national debt is $__________.

11. Do You Know? The acronym GDP stands for ___________ .
The index most frequently used by economists to measure inflation is the ___________.
___________ policy refers to changes in government spending and taxation.
The number of U.S. farmers is roughly ________ million.
The current price of:
gold = $______/ounce corn = $______/bushel
cotton = $_______/pound soybeans = $______/bushel

12. Do You Know? Crude oil prices are $______ per barrel.
The chairman of the Federal Reserve System is _______.
The letter K on your dollar refers to which Federal Reserve Bank?
The current inflation rate is ___________.
The current unemployment rate is _______.
The agricultural sector accounts for what percent of the GDP in the United States? _______%
The GDP of the United States is roughly $________ trillion.

13. AGRICULTURAL ECONOMICS -- THE OLDEST PROFESSION?
Who was the first Agricultural Economist?

14. What is Agricultural Economics?
Chapter 1

15. Bless the Lord, O my soul,
thou dost cause the grass to
grow for the cattle, and
plants for man to cultivate,
that he may bring forth
food from the Earth.
Psalm 104

16. Topics of Discussion SCOPE OF ECONOMICS Scarce Resources
Making Choices
DEFINITION OF ECONOMICS
Microeconomics versus Macroeconomics
Positive versus Normative Economics
Alternative Economic Systems
DEFINITION OF AGRICULTURAL ECONOMICS
WHAT DOES AN AGRICULTURAL ECONOMIST DO?
Role at the Microeconomic Level
Role at the Macroeconomic Level
Marginal Analysis

17. Scarce Resources Natural and biological resources Human resources
Natural: land, mineral deposits, water
Biological: livestock, crops
Human resources
labor
Manufactured resources
capital, machines, equipment, structures
Page 2

18. Making Choices
Resource scarcity forces consumers and producers to make choices
Opportunity cost – an implicit cost associated with economic decisions
Specialization – comparative advantage and the basis for trade
Individual decisions – maximization of consumer utility and producer profits
Societal decisions – production possibilities given existing resources
Pages 3-4

19. Opportunity Cost
The implicit cost associated with the next best alternative in a set of choices available to decision-makers.
Opportunity cost associated with pursuing a degree at Texas A&M University.

20. Problem 8 in Chapter 1
(see page 9)

21. Specialization
Definition: the separation of productive activities between persons or geographic areas in such a manner that none of these persons or regions is completely self-sufficient. Example of specialization for regions of the United States

22. Relative strengths of Kansas

23. Relative strengths of Idaho

24. Relative strengths of Florida

25. Page 4 Each state specializes in what it does
best and trades with other states…
Page 4

26. Page 4 Each state specializes in what it does
best and trades with other states…
Page 4

27. Page 4 Each state specializes in what it does
best and trades with other states…
Page 4

28. Page 4 Each state specializes in what it does
best and trades with other states…
Page 4

29. Scope of Economics Microeconomics versus macroeconomics
Micro - individuals or groups of individuals
Macro - broad aggregates at economy level
Fallacy of Composition
That which is true in an individual situation is not necessarily true in the aggregate
Positive versus normative economics
Positive - “what is”, or “what would happen if”
Normative - “what should be”
Alternative economic systems
Capitalism, socialism, communism
U.S. has mixed economic system
Pages 5-6

30. Definition of Economics
“…a social science that deals with how consumers, producers and societies choose among the alternative uses of scarce resources in the process of producing, exchanging, and consuming goods and services”.
Page 5

31. What is 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.”
Page 6

32. What Does an Agricultural Economist Do?
Role at microeconomic level
Production economists
Market economists
Financial economists
Resource economists
Role at macroeconomic level
Marginal Analysis

33. IMPORTANT WEBSITES
 Capps
 USDA 
Federal Reserve Economic Database

34. Assignments Please do all problems in Chapter 1 (see page 9)
Review Graphical Analysis (pages 10-12)