Economics of Agribusiness
Lecture 1
Agriculture and horticulture – industries producing agricultural and horticultural products.
There are no unique definitions.
Agri-complex/ Agribusiness:
- Based on domestically produced raw products.
- Based on domestically produced and imported raw products.
Net and Gross Domestic Product GDP – national sum of value added
National income – GDP corrected for net income earned abroad.
Share of agriculture in GDP decreases because:
1. Differentiation (dividing production process vertically) versus integration (opposite).
2. Specialization (dividing production processes horizontally) versus diversification
(opposite).
3. Relatively high productivity increases in agriculture.
Law of Engel: with more income smaller increase in food consumption.
Employment is: source of income and taxes (source of government income)
Export balance = export – imports.
o Is often seen as a sign of competitiveness.
Greenhouse effect: carbon dioxide, nitrous oxide and methane.
Acidification: nitrogen oxides, sulphur dioxide, ammonia.
Eutrophication: nitrogen, phosphorus
Lecture 2 Refresher calculus
Linear function:
Quadratic function:
Natural logarithmic function:
Rate of change of y with respect to x;
,First order derivative: measures the slope of a function
Lim = means that becomes very small
Second order derivative: measures the curvature of a function – the extent to which a
function is increasing or decreasing.
Differentiation rules:
Power-function rule:
Sum difference rule:
Product rule:
Quotient rule:
Chain rule:
Partial differentiation: in case a function depends on more than one variable:
Partial derivative with respect to x1 holding x2 constant:
Elasticity of y with respect to x:
Elasticity = the percentage change in variable y if variable x changes with 1%
Indefinite integral: where c is an arbitrary constant of integration
Definite integral: the area under a curve between two points
, Convex:
Concave:
Lagrange
Subject to:
First order conditions:
Optimum:
Lecture 4
Firm: organization that transforms inputs into outputs
Output: grown or manufactured commodities and services
Input: factor of production – resources used in production like labor, capital goods, energy
and materials.
o Variable – quantity can be adjusted in short run
o Quasi-fixed – quantity fixed in short run but can be adjusted in long run.
Economies of scale
o Division of labor or specialization
o Indivisibilities (sharing machinery)
Diseconomies of scale – if you hire a lot of people you also need someone to supervise.
Supervisors tend to be expensive. So, at some point you may spend more on management
instead of production.
Lecture 1
Agriculture and horticulture – industries producing agricultural and horticultural products.
There are no unique definitions.
Agri-complex/ Agribusiness:
- Based on domestically produced raw products.
- Based on domestically produced and imported raw products.
Net and Gross Domestic Product GDP – national sum of value added
National income – GDP corrected for net income earned abroad.
Share of agriculture in GDP decreases because:
1. Differentiation (dividing production process vertically) versus integration (opposite).
2. Specialization (dividing production processes horizontally) versus diversification
(opposite).
3. Relatively high productivity increases in agriculture.
Law of Engel: with more income smaller increase in food consumption.
Employment is: source of income and taxes (source of government income)
Export balance = export – imports.
o Is often seen as a sign of competitiveness.
Greenhouse effect: carbon dioxide, nitrous oxide and methane.
Acidification: nitrogen oxides, sulphur dioxide, ammonia.
Eutrophication: nitrogen, phosphorus
Lecture 2 Refresher calculus
Linear function:
Quadratic function:
Natural logarithmic function:
Rate of change of y with respect to x;
,First order derivative: measures the slope of a function
Lim = means that becomes very small
Second order derivative: measures the curvature of a function – the extent to which a
function is increasing or decreasing.
Differentiation rules:
Power-function rule:
Sum difference rule:
Product rule:
Quotient rule:
Chain rule:
Partial differentiation: in case a function depends on more than one variable:
Partial derivative with respect to x1 holding x2 constant:
Elasticity of y with respect to x:
Elasticity = the percentage change in variable y if variable x changes with 1%
Indefinite integral: where c is an arbitrary constant of integration
Definite integral: the area under a curve between two points
, Convex:
Concave:
Lagrange
Subject to:
First order conditions:
Optimum:
Lecture 4
Firm: organization that transforms inputs into outputs
Output: grown or manufactured commodities and services
Input: factor of production – resources used in production like labor, capital goods, energy
and materials.
o Variable – quantity can be adjusted in short run
o Quasi-fixed – quantity fixed in short run but can be adjusted in long run.
Economies of scale
o Division of labor or specialization
o Indivisibilities (sharing machinery)
Diseconomies of scale – if you hire a lot of people you also need someone to supervise.
Supervisors tend to be expensive. So, at some point you may spend more on management
instead of production.
