WHAT IS AGRICULTURAL ECONOMICS?

​Introduction to agricultural economics

Economics is the study of how man and society chooses to allocate scarce productive resources to produce various commodities, over time, and distribute them among various consumers in society.

It attempts to explain how man can best use the limited resources to produce goods and services which satisfies his needs with minimum wastage or loss of these resources

1. food,
2. clothing
3. shelter

​Agricultural Economics

Agricultural economics is therefore defined as a science that aims at maximizing output while minimizing costs by combining the limited supplies of goods and services for use by the society over a certain period of time.
These are;

1. land,
2. capital,
3. labour
4. Management

Basic economic Principles

Scarcity

• Economic scarcity means resources are limited in supply relative to demand.
• This principle implies that there is no time that man can have enough resources to satisfy all his need or desires

Choice/Preference

• Human wants are many and varied and means of satisfying them are limited.
• Therefore, man has to make a choice among the alternatives in order to use the resources available.
• Man does this by satisfying the most pressing needs first.
• This is called scale of preference.

Opportunity Cost

• Opportunity cost is the revenue forgone from the best alternative.
• It exists only where there are alternatives.
• Where there are no alternatives the opportunity cost is equal to zero.
• Opportunity cost helps in decision making.

Farm Records

• Farm records are documents kept in the farm
• They show farm activities carried out over a long period of time
• Or information kept in the farm in written form, about the farm and all activities in it.

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