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MA & PhD in Agricultural and Applied Economics from University of WisconsinMadison BA in Economics and Political Science from Yale University Specialist in the economics of technology, from cradle to grave: R&D, adoption & diffusion, consumer acceptance. Special interest in GM crops Specialist in development in Sub-Saharan Africa and North Africa.
2)
A managerial economics course in how to manage an agri-business A technical course in how to use Excel and statistics to understand information about an agri-business.
Lectures from Keats Managerial Economics text Homework from Keat and from Hill et al. Econometrics and Ogunc and Hill Using Excel Copyright 2009 Pearson Education, Inc. Publishing as Chapter One for Econometrics Prentice Hall.
Lectures:
1 8am 9:30 Break 9:30 10am Lecture 2 10am 11:30
Lecture
Afternoons
Chapter One
Economics and managerial decision making Economics of an agribusiness Review of economic terms
Economics
The study of the behavior of human beings in producing, distributing and consuming material goods and services in a world of scarce resources
Management
The science of organizing and allocating a firms scarce resources to achieve its desired objectives
Managerial economics
The use of economic analysis to make business decisions involving the best use (allocation) of an organizations scarce resources
are the economic conditions in our particular market? market structure? supply and demand? technology?
are the economic conditions in our particular market? government regulations? international dimensions? future conditions? macroeconomic factors?
14
6000
4000
2000
0 Years
12000
6000
4000
2000
Years
What changed?
16
1400000
1200000
Coffee Production
1000000
800000
600000
400000
200000
our firm be in this business? if so, what products should we be selling? at what price should we be selling our product? and at what output level?
can we maintain a competitive advantage over other firms? as a low cost-leader? by product differentiation? by finding a market niche? by outsourcing, alliances, mergers? through an internationalization of our product or process?
Questions that agri-business managers must answer: What are the risks involved in this business? They could be due to shifts in demand and/or supply conditions? technological changes in the industry?
Ours
are the risks involved? exchange rates (for companies in international trade)? political risk (for firms with foreign operations)?
Risk is the chance that actual future outcomes will differ from those expected
Economics of an agri-business
21
The economics of an agri-business refers to the key factors that affect the firms ability to earn an acceptable rate of return on its owners investment The most important of these factors are competition technology customers
Economics of a business
22
Example: Kodak
struggled 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
Global application
23
Microeconomics is the study of individual consumers and producers in specific markets, especially: supply and demand pricing of output production process cost structure distribution of income
Macroeconomics is the study of the aggregate economy, especially: national output (GDP) unemployment inflation fiscal and monetary policies trade and finance among nations
Resources are inputs (factors) of production, notably: land labor capital entrepreneurship
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 subjective value) that must be sacrificed in choosing one activity over the next best alternative
Allocation decisions must be made because of scarcity. Three choices: What should be produced? How should it be produced? For whom should be produced?
What - begin or stop providing goods/services (production) How - hiring, staffing, capital budgeting (resourcing) For whom target the customers most likely to purchase (marketing)