Course Number:	AGEC 0503
Course Title:	Agricultural Prices
Credit Hours:	4
Prerequisites:	ECON 0302 or equiv.; MATH  0161 and  MNGT 0301 or ADMH 0215
Corequisite:	None

OBJECTIVES:	To develop skills in applying supply and demand theory to problems in
    		agriculture with special reference to price. To develop, evaluate, and interpret 
	    	rudimentary economic models.  

TEXT: Agricultural Product Prices - Tomek and Robinson, Third edition (1990)

GRADING: Class participation (10%), weekly quizzes (10%), a midterm (40%), comprehensive final (40%)

SPECIAL NEEDS: Any student requiring special accommodation should notify the instructor and 
	       contact the Director, Program for Students with Disabilities, 1244 Haley Center

POLICIES: All quizzes will be announced. Student participation in class discussions is  expected. 
          Class attendance is not mandatory, but is usually positively correlated with test 
	  performance and generally increases score for class participation.

OUTLINE:

WEEK:	TOPIC/READINGS

1-2	Introduction
		Characteristics of Agricultural Prices
		Role of Prices in a Market Economy
		Meaning of Equilibrium
		Hypotheses: Definition, Source, and Role in Economic Reasoning 
	
		Tomek and Robinson, Chapter 1, pp. 82-83
		Helmberger, Ch. 1.
		
3-4	Demand for Agricultural Products

		Demand Theory: Basic elements
		Consumer vs. Market Demand
		Primary vs. Derived Demand
		Demand Shifters
				
		Tomek and Robinson:  Chapter 2
	
5 - 6	Demand Elasticities and Related Coefficients

		Price elasticities: Definitions and interpretations
		Income and cross elasticities
		Important uses of the elasticity concept: 
			1. "The paradox of agriculture"
			2.  Price volatility
			3.  Efficacy of price supports

		Tomek and Robinson: Ch. 3 
			
7-8	Supply Relationships in Agriculture

		Theoretical basis of supply functions
		Market supply and length of run
		Supply elasticities
		Supply shifters

    	Tomek and Robinson: Ch. 4

MIDTERM

9-10 Theory of Price Determination

		Classification of Markets
		Price Determination Under Pure Competition
		Price Determination Under Monopoly
		Price Discrimination
		
		Tomek and Robinson, Chapter 5
	
11	A Partial Equilibrium Model of Price Determination

		Meaning of Partial Equilibrium
		Some Definitions:
		         Parameters 
    			 Endogenous Variables
		    	 Exogenous VariablesT
		The Model
		Algebraic Solution and Interpretation

		Handout	

12 -13	Applications 

		Excise Tax
		Advertising
		Price Subsidy
		Government Purchase Scheme 
		Deficiency Payment
		Production Control

		Tomek and Robinson, Chapter 14 
				
14 	Extensions				

		Trade sector
		Dynamics (Cobweb model)
		Welfare analysis
		
		Tomek and Robinson, Ch. 8, pp. 139-42 and 147-155

15 	Review

FINAL	

Justification for graduate credit:

Lectures are math based and analytical.  Students are required to reason from first 
principles using deductive logic.  The course is a prerequisite for Advanced 
Agricultural Price Analysis (AGEC  7030), a course designed for mature M.S./beginning 
Ph.D. students.    

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