Introduction to Agricultural and Natural Resources.pptVIP

Flip the Right Graph! $ $ Water to Farm Water to Plant What is the optimum allocation? Why? Principle of Equi-marginal Returns Principle of Equi-marginal Returns – a scarce resource should be allocated between alternative uses so that the marginal returns (in this case, MVP’s) are equal in the alternative uses. What if local environmentalists want to keep the water in place for aesthetic purposes? What about fisher-men, -women? What are the implications for how society should allocate scarce resources? Land? Cars? Water? TVs? Forests? Food? Introduction to Production and Resource Use Summary The combination of physical and value (dollar) relationships between inputs and output allows us to make fundamental decisions regarding resource use and allocation in our economic system. Lecture Sources: Text and Miscellaneous Materials Introduction to Agricultural and Natural Resources Introduction to Production and Resource Use FREC 150 Dr. Steven E. Hastings Introduction to Production and Resource Use This Outline Covers the First part of Chapter 6 in Penson et al. Major Topics Production Decisions Types of Resources The Production Function – TPP, AVP and MPP Impact of Technology Value Relationships Firm’s Demand for an Input An Application of Eqi-marginal Return Summary Important Concepts Production Decisions Important Concepts: Production – the process of transforming resources into goods and services (again, soil to corn flakes) Resources - inputs (land, management, capital, etc.) Goods and Services – provide satisfaction to consumers Important Questions: What to produce? How to produce? How much to produce? Types of Resources (Inputs) Many ways to distingui