Module 2: The Value of Economic Thinking in Agriculture


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Whenever I ask students whether they would be taking my economics class if it weren’t required, the answer is a resounding, “NO!”  The majority of students find it dry and boring, and not particularly necessary.  In fact, it’s not just students who think this way.  I was on a flight from Toronto to Frankfurt a few years ago and the gentleman sitting next to me asked what I did.  When I told him that I teach economics, he replied, “Oh, I’m so sorry.”  (OK, I’m going to admit this, but only to you – I made sure that a single dog hair rode out on his suit… well, maybe more than one.)

So, if you’re not looking forward to what comes in the remainder of the class, I understand.  However, I'm here to tell you that economics is not only relevant but that it can be exciting!  Imagine being able to identify what’s happening in the world around you, and more importantly why it’s happening.  Imagine being to engage with the “old guys” on coffee row about the state of world markets and what might be happening to prices and demand and how you will fare in the market.  What about having a discussion about the news in the Western Producer in a way that you are informed and can shed light on things to come? Consider how much better you’ll be at making personal and business decisions when you know how to evaluate trade-offs, and you can predict the effects on businesses of a range of events such as drought or changes to agriculture policy.  Knowledge is power.

In the first module, we talked about seven key economic principles that will be woven throughout this course, and beyond the classroom.  We will now introduce some terms and ideas that will help foster your economic thinking and make some distinctions between microeconomics and macroeconomics; what we mean by efficiency and equity, normative and positive thinking; and how to use economic models as a guide to decision making.  We will also talk more about the government’s role in the agriculture industry.

Learning Objectives

Upon completion of this module, you will be able to:

  1. Differentiate between microeconomics and macroeconomics
  2. Discuss the context of agricultural economics
  3. Use economic terms to better describe your ideas
  4. Choose the top 10 agricultural issues in which you are most interested

Module Instructions

  1. Read chapter 1 of the textbook
  2. Read chapter 2 of the textbook
  3. Read the module
  4. Visit the links to websites as you’re reading the module, or after.
  5. Choose the assignments you will do from the end of the module

Required Readings

Taylor, Tim, and Greenlaw, Steven, 2014. Chapter 1: Welcome to economics. In: Principles of Economics. OpenStax College, Rice University. Available online:

Taylor, Tim, and Greenlaw, Steven, 2014. Chapter 2: Choice in a world of scarcity. In: Principles of Economics. OpenStax College, Rice University. Available online:

Key Terms and Concepts

  • Circular flow diagram
  • Factors of production
  • Economic models
  • Theory
  • Inflation
  • Invisible hand
  • Efficiency
  • Equity
  • Macroeconomics
  • Microeconomics
  • Nominal price
  • Normative
  • Positive
  • Real price
  • Roles of government
  • Dismal science