OVERHEADS FOR ARE 012 LECTURE

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WELCOME TO ARE 012
Introduction to Agricultural Economics With Herman
Sampson
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Microeconomics ( the trees)

• Studies economic behavior of individual decision
  making units such as,
• Consumers
• Resource Owners
• Business Firms (producers)
• in a market economy
• At times, micro will study economic behavior at
  the industry level

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Macroeconomics (the forest)

• Studies the aggregate level of economic activity,
• Economic systems value of total
• output GDP
• Level of National Income
• Total Level of Unemployment
• General Price Level of the Economy Inflation

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Macroeconomics (the forest)

• we will deal with some macroeconomic topics
  first, then concentrate on microeconomics

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Normative Economics

• Normative subjective, value laden, emotional
• What ought to be economics
• Rx and/or Policy oriented
• Hear a bunch of normative economic statements
  during political elections

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Positive Economics

• Positive Objective, without emotion or value
  judgment!
• What is, What was, What will be economics
• Based on probability and statistical methods

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• Microeconomics
• Normative microeconomics
• Positive microeconomics
• Macroeconomics
• Normative macroeconomics
• Positive macroeconomics

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Macroeconomics

• 1. Fiscal Policy
• Govt. tax and spend policies
• 2. Monetary Policy
• Manipulation of the money supply by the Federal
  Reserve system to affect short-term interest
  rates and control inflation

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Private Property Rights

• Negative Externality
• When you produce or consume a commodity or
  service within your private property rights that
  imposes a cost on a third party not directly
  involved in the market transaction.

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Private Property Rights

• The cost imposed on the third party is very
  difficult (expensive) for the third party to
  recover
• AKA a Spillover Cost

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Private Property Rights

• Laws are often enacted by legislative bodies that
  constrain private property rights in order to
  rectify negative externalities, or at least
  reduce the cost to third parties in recovering
  damages

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Negative Externalities

• Some Examples
• Seat Belt Crack Down in N.C. (Click It or
  Ticket)
• California Helmet Law for Motorcyclists

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Negative Externalities

• Possible Solutions
• Pass Laws
• Post Bond to assure financial responsibility

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Negative Externalities

• Some Examples
• Imperial Foods of Hamlet, N.C. vs. Imperial
  Sandwich Co. of Goldsboro, N.C.

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Positive Externalities

• When you produce or consume a commodity or
  service within your private property rights that
  bestows a benefit on a third party not directly
  involved in the market transaction.

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Positive Externalties

• The benefit bestowed on the third party is very
  difficult (expensive) for the third party to
  recover
• AKA a Spillover benefit