capitalism and economy iafnr agribusiness moduleiafnr agribusiness module
TRANSCRIPT
Capitalism and Economy
IAFNR Agribusiness Module
Economics
• What is Economics?• Economics is…• “the study of allocation of scarce resources among competing
alternatives.”• “the study of how individuals and countries decide how to use
scarce resources to fulfill their wants.”• “the study of the decisions involved in producing, distributing,
and consuming goods and services.”
Let’s learn a little more about Economics!
3 Components of Economics
•Did you notice some of the key words mentioned in the definitions of Economics? They are the three components of Economics.• Scarcity• Not enough resources to satisfy wants and needs• Not to be confused with “a shortage”
• Resources• Land, Labor, Capital, and Management
• Wants and Needs• Can you think of some examples of each?
Are these Needs or Wants?
Image retrieved from: http://www.thenewstrack.com/top-10-most-expensive-basketball-shoes-in-the-world/
3 Economic Questions
• In order to manage the 3 components of Economics modern societies must answer these 3 economic questions• What goods should be produced, and how much
of each?• How should these goods be produced?• Who should get what and how much?
Economic Systems
Traditional• Things are done “the way they
have always been done.”
• Decision based upon customs or religious beliefs; passed down from generation to generation
• Traditional systems exist in limited parts of Asia, Africa, the Middle East and Latin America
Capitalism• Individuals have free reign over
their time and resources and can determine how to use those assets• Ownership is private• Little involvement of
government
• Self-regulated System• Free market determines prices• Competition is driving force of
activity and decisions
Economic Systems
Traditional• Things are done “the
way they have always been done.”
• Decision based upon customs or religious beliefs; passed down from generation to generation
• Traditional systems exist in limited parts of Asia, Africa, the Middle East and Latin America
Capitalism• Individuals have free reign
over their time and resources and can determine how to use those assets• Ownership is private• Little involvement of
government
• Self-regulated System• Free market
determines prices• Competition is driving
force of activity and decisions
Communism• Totalitarian system of
government that a single body controls government owned production means• Total control of
economic matters • Individuals have
no power
• Everyone contributes according to need
Capitalism
an economic system characterized by private or corporate ownership of capital goods, by
investments that are determined by private decision, and by prices, production, and the
distribution of goods that are determined mainly by competition in a free market
Principles of Capitalism in Agribusiness
• Private ownership of property and resources• Anyone that owns property may use it in production (ex. Crops or
business)• Potential for profit
• Profit is a direct result of business decisions
• Free Market determines prices• Based upon supply/demand
• Competition is driving force• How many companies can produce a similar product? Unlimited!• Creates change among products and supply/demand
The Big Picture of AgribusinessAgricultur
al Industry
Agribusiness Input
Agribusiness
Output
Farmers
Where do you see capitalism at
work in Agribusiness?
The United States Economy
A Mixed Economy
Image retrieved from: http://redalertpolitics.com/2013/03/28/marine-told-he-cant-fly-american-flag/
The United States Economy
• A mixed system• The U.S. Economy operates with aspects of different economic
systems but is known to most as the free enterprise system
• Characteristics of the U.S. Economy• Little or no government control
• Some government regulation for safety of the public
• Freedom of enterprise• Free to own and make decisions about
factors of production• Freedom of choice• Rights to own private property• Profit incentive• Competition
Image retrieved from: http://www.dailygalaxy.com/my_weblog/2008/08/can-the-us-econ.html
References
Ricketts, C., & Ricketts, K. (2009). Agribusiness Fundamentals & Applications. New York: Delmar Cengage Learning.
Merriam-Webster’s Dictionary (2014). Capitalism. Retrieved from http://www.merriam-webster.com/dictionary/capitalism