Introduction to Agricultural Economics / Edition 7

by John Penson, Oral Capps Jr., C. Rosson, Richard Woodward

Overview

For courses in Introduction to Agricultural or Applied Economics

Introduction to Agricultural Economics, 7/e, provides students with a systematic introduction to the basic economic concepts and issues impacting the U.S. food and fiber industry and offers strong coverage of macroeconomic theory and international trade.

Teaching and Learning Experience:

Strong coverage of macroeconomics, the role of government, and international agricultural trade: The coverage of macroeconomics and agricultural programs and policies allows students to further understand the domestic market economy.

Building block approach: Discusses individual consumer and producer decision-making, market equilibrium and economic welfare conditions, government intervention in agriculture, macroeconomic policy, and international trade.

Extensive chapter review: Each chapter contains an extensive list of questions designed to test student comprehension of the material covered.

Product Details

ISBN-13:	9780134602820
Publisher:	Pearson Education
Publication date:	03/22/2017
Series:	What's New in Trades & Technology Series
Edition description:	New Edition
Pages:	432
Product dimensions:	8.70(w) x 10.80(h) x 0.90(d)

About the Author

John B. Penson, Jr., holds the titles of Regents Professor and Stiles Endowed Professor of Agriculture in the Department of Agricultural Economics at Texas A&M University. He is also a senior scientist with the Norman Borlaug Institute for International Agriculture. Penson received a Ph.D. degree in agricultural economics from the University of Illinois. Penson has taught courses in Korea, Japan, Guatemala, Nicaragua, and Ecuador. His research has focused on the macroeconomics of agriculture and portfolio credit risk analysis. He has also conducted research in the Middle East and Eurasia.

Oral Capps, Jr., holds the titles of Executive Professor and Regents Professor in the Department of Agricultural Economics at Texas A&M University. He is a certified business economist and co-director of the Agribusiness, Food and Consumer Economics Research Center at Texas A&M University. He is also holder of the Southwest Dairy Marketing Endowed Chair. He received a Ph.D. in agricultural economics from Virginia Tech. He has received numerous teaching and research awards and is recognized internationally for his research in demand and price analysis.

C. Parr Rosson III is Professor and Department Head of the Agricultural Economics Department at Texas A&M University. He received his Ph.D. in agricultural economics from Texas A&M University. Rosson works in the areas of international trade and international marketing. He currently chairs the Education Committee of the Texas—Cuba Trade Alliance. He served on the Grains, Feed, Oilseeds and Planting Seeds Agricultural Trade Advisory Committee for the U.S. Trade Representative and U.S. Department of Agriculture from 2001 to 2015. He has conducted projects in Latin America, the Middle East, and Asia.

Richard T. Woodward is Professor in the Department of Agricultural Economics at Texas A&M University. His research is in the general area of environmental and resource economics. His recent research projects have focused on the use of transferable permits to address water quality and fishery challenges and problems of choice under uncertainty.

Table of Contents

Part I: Introduction

1. What is Agricultural Economics?

2. The U.S. Food and Fiber Industry

Part II: Understanding Consumer Behavior

3. Theory of Consumer Behavior

4. Consumer Equilibrium and Market Demand

5. Measurement and Interpretation of Elasticities

Part II: Business Behavior and Market Equilibrium

6. Introduction to Production and Resource Use

7. Economics of Input and Product Substitution

8. Market Equilibrium and Product Price: Perfect Competition

9. Market Equilibrium and Product Price: Imperfect Competition

Part IV: Government in the Food and Fiber Industry

10. Natural Resources, the Environment, and Agriculture

11. Government Intervention in Agriculture

Part V: Macroeconomics of Agriculture

12. Product Markets and National Output

13. Macroeconomic Policy Fundamentals

14. Consequences of Business Fluctuations

15. Macroeconomic Policy and Agriculture

Part VI: International Agricultural Trade

16. Agricultural Trade and Exchange Rates

17. Why Nations Trade

18. Agricultural Trade Policy and Preferential Trading Arrangements

Glossary

Index

Preface

The purpose of this book is to provide beginning students in agriculture with a systematic introduction to the basic concepts and issues in economics as they relate to a major segment of the US economy—namely, the food and fiber industry. This requires that the student understand. the microeconomic and macroeconomic forces influencing the decisions of producers and consumers of food and fiber products, which include (1) farmers and ranchers, (2) the agribusinesses that supply them with production inputs and credit, (3) the agribusinesses that process food products and manufacture fiber products, and (4) the agribusinesses that provide marketing and related services at the wholesale and retail levels to both domestic consumers and overseas markets.

We begin the book by answering the question raised by the title of Chapter 1, "What is agricultural economics?" We do this by first defining the field of economics and then developing a definition of agricultural economics based on the role that agricultural economists play at both the micro and macro levels. Chapter 2 discusses the changing structure of agriculture during the post-World War 11 period and the structure of those sectors in the economy that supply farmers and ranchers with inputs and process their output.

Part II helps students understand the economic decisions made by consumers of food and fiber products. The topics covered here include the forces influencing consumer behavior (Chapter 3) and the concept market demand for a particular product (Chapter 4). Part II concludes with the elasticity of demand (Chapter 5). The specification of various elasticity measures is supplemented byempirical examples and their relevance to decision making in the food and fiber industry, including the potential magnitude of consumer response and the implication for producer revenue.

Part III turns to the supply side of the market. Chapter 6 describes some basic fundamentals of assessing current business performance. Issues related to resource use and production response by businesses in the short run are explained in Chapter 7. This is followed by a discussion of the economic forces underlying the firm's input use (Chapters 8) and the firm's choice of commodities to produce (Chapter 9). Chapter 10 introduces the market supply curve, followed by the determination of market clearing prices and quantities under perfect and imperfect competition in Chapter 11. Empirical examples illustrate the magnitude and applicability of the relationships covered in the chapter.

Part IV addresses the role of government in the food and fiber industry. Chapter 12 outlines the general nature of government involvement in farm economic issues, consumer issues, resource issues, and international trade issues. Resource issues are also addressed in other chapters as well. Chapter 13 explores the relationship between market equilibrium and farm program policy, introducing the variety of approaches taken to support prices and incomes of farmers over the last 50 years. This includes the current farm commodity legislation set to expire after 2002.

Part V focuses on the macroeconomics of agriculture. Chapter 14 outlines the general linkage between product markets and national output, Chapter 15 illustrates the consequences of business fluctuations in the economy, Chapter 16 documents the importance of monetary policy to the economic performance of the economy, and Chapter 17 does the same thing for fiscal policy. Part V establishes the relationship between events in the general economy and their impacts on agriculture and other sectors in the U.S. food and fiber industry. Chapter 18 concludes this part of the book with a brief walk through the last several decades, illustrating graphically how changes in the macroeconomy affected the economic performance of agriculture.

Part VI focuses on international agricultural trade issues. Chapter 19 examines the growth and instability of agricultural trade, including the relative dependence on exports and imports. Chapter 20 focuses on the foreign exchange market, the international monetary system, and the effects of foreign exchange rates on U.S. agricultural trade. Chapter 21 explores the rationale for why nations trade and who gains from trade. Chapter 22 addresses agricultural trade policy, the rationale for restricting free trade, and the trade policy decision-making mechanisms and institutions. Finally, Chapter 23 examines the formation of preferential trading arrangements and their potential impact.

Each chapter concludes with a summary of the chapter's purpose and the major points covered. In addition, the key terms used in the chapters are defined. Most chapters also include a number of exercises the readers can use to test their understanding of key issues covered in the chapter. There is also a list of references and further readings.

This textbook differs substantially from the traditional introductory agricultural economics textbook in several ways. First, the book explicitly goes beyond the farm gate to address the entirety of the food and fiber industry, which accounts for about 17% of U.S. national output. Second, the book places an unusually strong emphasis on the macroeconomics of agriculture (five chapters) and international trade (five chapters). The experience of the 1980s and 1990s certainly has shown that farmers and ranchers, agribusinesses, financial institutions, and consumers of food and fiber products are significantly affected by macroeconomic policies and trade agreements.

Supplementary materials to complement this textbook—an instructor's manual containing chapter outlines as well as a test bank of questions and problems (with solutions) that have been classroom tested over an extended time period, and transparency masters that help present key concepts from the text—are available. A slide show of key features of each chapter in PowerPoint will also be made available.

We wish to thank the many students who have given us comments and suggestions during the developmental phases of this edition.

John B. Penson, Jr.
Oral Capps, Jr.
C. Parr Rosson III

Editorial Reviews

This textbook provides a systematic introduction to the major concepts and issues in economics, specifically as they relate to agriculture. Focusing on the decisions made by consumers and producers of food and fiber products, it covers microeconomic aspects, sector performance, market equilibrium, government regulation, macroeconomics, and international trade. Unlike most texts on the subject, this book does not restrict its coverage to farm economics, but looks at the entire industry. The authors teach at Texas A&M University. Annotation c. Book News, Inc., Portland, OR (booknews.com)

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