- - AGRICULTURAL CORE CURRICULUM - -

(CLF1000)  Advanced Core Cluster:AGRICULTURAL BUSINESS MANAGEMENT

  (CLF1200)  Unit Title: Economic Principles

__________________________________________________________________________
  (CLF1208) Topic: ECONOMICS TERMINOLOGY              Time         Year(s)
                                                   -- Hours         3 / 4
__________________________________________________________________________

           Topic Objectives:  Upon completion of this lesson, the
                              student will be able to:

           Learning Outcome #:

              (***)  -  This glossary is to be duplicated and provided to the 
                        students as a reference for this unit. Some of the 
                        terms included go beyond the scope of the learning 
                        outcomes.

           Special Materials and Equipment:

           References:  Cramer, Gail L., & Jensen, Clarence W.  (1991). 
                          AGRICULTURAL ECONOMICS AND AGRIBUSINESS (4th ed.). 
                          New York: John Wiley & Sons.

           Evaluation:

=============================NOTE TO INSTRUCTOR===============================
The following definitions are from a variety of sources and have sometimes 
been adapted to fit this unit.
==============================================================================

TOPIC PRESENTATION: ECONOMICS TERMINOLOGY

AGRIBUSINESS: involves the manufacture and distribution of farm 
supplies; production operations on the farm; and the storage, 
processing and distribution of farm commodities and items made for 
them.

AGRICULTURAL ECONOMICS: an applied social science dealing with how 
mankind uses technical knowledge and scarce productive resources to 
produce food and fiber and to distribute them to society for 
consumption over time.

AVERAGE FIXED COST (AFC): fixed cost per unit of output, determined by 
dividing total fixed cost by output at each level of output.

AVERAGE PHYSICAL PRODUCT (APP): units of output produced per unit of 
input for each level of variable input use.

AVERAGE TOTAL COST (ATC): total cost per unit of output, determined by 
dividing total cost by output at each level of output.

AVERAGE VALUE PRODUCT (AVP): the value of output per unit of input for 
each level of variable input use.

AVERAGE VARIABLE COST (AVC): variable cost per unit of output, 
determined by dividing total variable cost by output at each level of 
output.


CAPITAL: production resources (goods) that are available, as a result 
of past human decisions, to produce other want-satisfying goods; also 
money.

COMPARATIVE ADVANTAGE: a situation in which an individual, region or 
nation is relatively superior at producing some goods because of its 
lower opportunity costs, and gains by trading for goods that another 
is relatively more proficient at producing.

COMPARATIVE ANALYSIS - the measure of one result with the results of 
past outputs of the same time period.

DEMAND: the various quantities of a good that consumers will buy
at different prices for that good, everything else unchanged.

DEPRECIATION: a method of prorating the cost of a working asset over 
its useful life. Depreciation may be defined as that decrease in value 
that occurs regardless of repair or maintenance.

EQUILIBRIUM: a condition in which opposing forces within a system just 
offset one another.

EQUILIBRIUM PRICE: the price in a market at which quantity supplied 
and quantity demanded are equal.

FIXED COSTS: those costs incurred for resources which do not change as 
output is increased or decreased. These costs must be paid no matter 
what enterprise is undertaken.

GROSS NATIONAL PRODUCT (GNP): the total market value of all final 
goods and services produced in an economy during a given period of 
time.

INPUT:  a factor of production or basic resource; may be fixed or 
variable in nature.

LABOR: the physical effort of humans that is combined with other 
resources to produce goods and services.

LAND: all the productive attributes of the earth's surface, including 
space and the natural environment.

LAW OF COMPARATIVE ADVANTAGE: the principle that each person, area or 
nation will gain economically if each specializes in producing those 
goods and services where they have the greatest relative advantage, 
then trades with other similarly specialized individuals, areas or 
nations.


LAW OF DIMINISHING MARGINAL UTILITY: as an individual consumes 
additional units of a specific good, holding everything else constant, 
the amount of satisfaction from each additional unit of that good 
decreases.

LAW OF DIMINISHING RETURNS: as successive amounts of a variable input 
are combined with a fixed input, the total product will increase, 
reach a maximum and eventually decline.

MACROECONOMICS: the area of economics that deals with output, 
employment, incomes or other activities in the aggregate.

MANAGEMENT: the process of controlling or directing a situations. Also 
one of the four factors of production, with responsibility for 
decision making.

MARGINAL:  additional or extra, either positive or negative.

MARGINAL COST (MC): the change in total cost when output is changed by 
one unit.

MARGINAL FACTOR COST (MFC): the amount added to total cost when one more unit 
of the variable input is used in production.

MARGINAL PHYSICAL PRODUCT (MPP): the amount added to physical product 
when another unit of the variable input is used in production.

MARGINAL VALUE PRODUCT (MVP): the amount added to total value product 
when another unit of the variable input is used.

MARGINAL REVENUE: the amount added to total revenue when an additional 
unit of output is produced and sold.

MARKET: consists of buyers and sellers with facilities to communicate 
with each other.

MARKET EQUILIBRIUM: that point where the market demand curve 
intersects the market supply curve. The market clearing price where 
quantity demanded equals quantity supplied.

MAXIMIZE RETURNS: planning so the greatest amount of return is 
realized on an investment.

MC = MR: marginal cost equals marginal returns.

MICROECONOMICS: the area of economics that deals with individual 
decision units--people, firms, or markets--within the economy.

OPPORTUNITY COST: the value of other opportunities given up in order 
to produce or consume any good.

OUTPUT: a unit of production resulting from the combination of 
variable and fixed inputs.

PERFECT COMPLEMENTS: resources that must be used in a given ratio in 
order to produce a product.

PERFECT SUBSTITUTES:  resources that substitute for one another in 
production at a constant rate.

PHYSICAL FUNCTION: the processing, storage, and transportation of 
commodities in  the marketing system.

PHYSICAL SUPPLY: the total available quantity of a good or resource.


PRICE: the dollar value per unit of a resource, good or service as 
determined in the market or by other means.

PRODUCTION: any activity or process that satisfies a human desire 
directly or indirectly, presently or in the future. The combining of 
inputs to yield output.

RESOURCES: all of the inputs in the production process.

RESOURCE SUBSTITUTION: the ability of resources to substitute for one 
another in producing goods and services.

RISK: exposure to the possibility of loss.

SCARCITY: a basic economic condition in which our wants exceed the 
resources available to satisfy those wants.

SUBSTITUTES: two different goods (or resources) between which a choice 
is made to satisfy human wants (or to produce a product).

SUPPLY CURVE: the various quantities of a good that sellers will place on the 
market at different prices at a particular time, everything else remaining 
unchanged.

TIME VALUE OF MONEY: the amount that money increases or decreases 
through time depending on the many alternative uses.

TOTAL COST (TC): the sum total of all the firm's fixed and variable 
costs at each level of output.

TOTAL FIXED COST (TFC): the implicit cost of fixed resources used to 
produce a good or service.

TOTAL PHYSICAL PRODUCT (TPP): the total quantity of a product that is 
produced at each level of variable input use.

TOTAL REVENUE (TR): a firm's total value of output, obtained by 
multiplying the units of product produced by the price of that 
product.

TOTAL VALUE PRODUCT (TVP): the total value of output produced at each 
level of variable input use.

TOTAL VARIABLE COST (TVC): total of the costs of all the variable 
resources used in production.

UTILITY: the satisfaction an individual gets from consuming goods and 
services.

VALUE: the worth, in the market or to a person, of a good or service.

VALUE ADDED: the contribution to final product value by each stage in 
the production process.

VARIABLE COSTS: These costs which increase or decrease as varying amounts of 
the resource are used.  If an enterprise isn't undertaken the money will not 
be spent.





12/5/91 LM/GB/sg


#%&C