COURSE OUTLINE                                                                                                            Fall

Course Title:  Agricultural Production Economics          

Course Code: AE-6517           

Credit Hours:            3(3-0) 

Instructor:      Nadeem Anwar        

Email:             [email protected] 

After completing the course, students will be able to understand the theoretical core of production economics. The course is focused on economic analysis of production agriculture. The influential role of plant and animal biological growth processes sets this field of study apart from industrial production processes, where much greater levels of control are available to the producer and input and output relationships are measured with more completeness and precision. We will cover the basic theory and analytical tools required to conduct analysis of optimal management decisions subject to the biological production technology.

The successful student upon completion of this course will be able to demonstrate:

1) Understanding of basic production economics theory.

2) Familiarity with tools/problems of production economics research.

3) Familiarity with research issues/debates in the field.

4) Verbal and mathematical understanding of key concepts.

Definition and scope of agricultural production economics; Assumptions of static and dynamic production economics, production relationships, i.e. factor-product relationships, factor-factor relationship and product-product relationships; economic decision making under various production relationships; costs of production, returns to scale, technological change, resource allocation.

Recommended Books

1. Debertin, D.L (2012). Agricultural Production Economics. 2nd Edition. New York: McMillan  Publishing Company,.
2. Beatie, B. R. Taylor, C. R., & Myles, W.J. (2009). The Economics of Production.  New York: Krieger Publishing Company.

Suggested Books

1. Doll, J.P. & Orazem, F. (1992). Production Economics: Theory with  Applications. 2nd Edition. New York: Krieger Publishing Company.

 1:  Agricultural economists are frequently accused of spending too little time in the real world. A preoccupation with abstract theoretical issues means that agricultural economists are

sometimes unable or unwilling to look at the fundamental issues linked to the production and

marketing of agricultural commodities. Do you agree or disagree?

2:   Suppose that the coefficients or parameters of a production function of the polynomial form are to be found. The production function is

y = ax + bx2 + cx3

where

y = corn yield in bushels per acre

x = nitrogen application in pounds per acre

a, b and c are coefficients or unknown parameters

The production function should produce a corn yield of 150 bushels per acre when 200 pounds of nitrogen is applied to an acre. This should be the maximum corn yield (MPP = 0). The maximum APP should occur at a nitrogen application rate of 125 pounds per acre. Find the parameters a, b and c for a production function meeting these restrictions. Hint: First find the equation for APP and MPP, and the equations representing maximum APP and zero MPP. Then insert the correct nitrogen application levels in the three equations representing TPP, maximum APP and zero MPP. There are three equations in three unknowns (a, b, and c). Solve this system for a, b, and c.

3:   Explain the consequences to the farmer if the production function for milk were a linear

function of the amount of feed fed to each cow.

4:   Draw a three-stage production function on a sheet of paper. Now turn the paper so that

the input x is on the vertical axis and output y is on the horizontal axis. Now turn the sheet of paper over and hold the sheet of paper up to a light. Look at the production function through the back side. What you see is the cost function that underlies the production function, with costs expressed in physical units of input use rather than dollars. If input prices are constant, the vertical axis can be converted to dollars by multiplying the physical units of input by the corresponding input price.

Sessional:                    12 ( Class Attendance:2, Presentation: 4, Assignments: 6)

Mid Term Test:           18

Final Term Test:         30