MANAGEMENT, ECONOMICS AND DECISION-MAKING
* Making decisions
* Choosing between alternatives
* Making choices based on economic analysis and evaluation MANAGER
* Anyone who participates in and affects the decision-making process, regardless of how informal and unstructured that process might be * Someone who is engaged in a decision involving choice and utilizes some form of economic evaluation REASON FOR STUDYING MANAGEMENT AND ECONOMIC ANALYSIS
* Because we are continually making decisions as managers, it becomes useful and necessary to study management and economic analysis. ROLE OF MANAGEMENT IN AGRICULTURAL ECONOMIC ANALYSIS
* To direct resources at both the firm and societal levels * To allow the objectives of the firm to be met given the financial constraints and managerial capabilities * To help the individual decision maker improve his or her performance ECONOMICS
* Allocation of scarce resources between competing ends for the maximization of those ends over time * Allocation of scarce resources for the satisfaction of human wants UNDERPINNINGS OF ECONOMICS
1. Allocation – making decisions about how to use our resources and capabilities 2. Scarcity – resources are scarce; so we need to allocate them 3. Unlimited wants – humans are insatiable; gives rise to scarcity problem 4. Goals or objectives – profit maximization and/or cost minimization and maximization of well-being 5. Time – allows differing courses of action to occur and goals to vary during the decision process RESOURCE
* Input provided by nature
* Modified by humans using technology
* Used to produce goods and services that satisfy human wants THREE IMPORTANT CHARACTERISTICS OF RESOURCES
1. Economic value – producers must pay to use resources 2. Limited supply – resources are limited and so are the goods and services produced from them 3. Alternative uses – because resources have alternative uses, trade-offs must be made OPPORTUNITY COSTS
* Measure of trade-offs
* Costs to an individual or firm of using a good for one purpose that is equal to the value that the good could have earned in another use * What a person is giving up to do what he is doing
* Value of alternative opportunities foregone or sacrificed QUESTIONS AN ECONOMIC SYSTEM NEEDS TO ANSWER
1. What to produce?
2. How to produce?
3. Who should receive income from sales?
4. When to produce?
MICROECONOMICS VS. MACROECONOMICS
* MICROECONOMICS deals with individual decisions of production and consumption. * MACROECONOMICS deals with the aggregate results of individual decisions at the national level. CLASSIFICATION OF ECONOMIC QUESTIONS
Positive economics – no judgment (e.g. What is the effect of an increase in the price of fertilizer on rice production?) *
Normative economics – judgment (e.g. Should the government subsidize rice farmers?) *
Prescriptive economics – combination; ways to achieve a desired result in the most efficient, profitable, or acceptable manner (e.g. Will semi-intensive prawn and milkfish farming be more profitable than intensive prawn culture?) AGRICULTURE
* From Latin agricultura, from ager (field) + cultura (cultivation) * The science, art, or practice of cultivating the soil, producing crops, and raising livestock * Farming
* Crop Sciences: Agronomy, Horticulture
* Animal Science and Dairy Science
* Soil Science
* Farming Systems
* Plant Pathology
* Food Science
* Agricultural Education
* Agricultural Economics
* Agribusiness Management
* Agricultural Engineering
* Agricultural Extension Development Communication
* Fisheries and Aquaculture
* Only one industry within the economy
Deals with one of the basic human needs – food!
Combines labor and management into one economic entity and one person...
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