This book is a principle of Agricultural Economics, intended for students who are taking their first course as well as in their higher studies and preparation for a variety of competitive exams in agricultural social science discipline. The main objective of this work is to present principle of agricultural economics study material in a clear, straight forward and simple manner. It provides students and instructors with a clear, current, and easy way to learning how a market-based economy runs and how to use basic economic principles for better decision making. It explains economic principles in a brief and reader-friendly format. It has covered all the topics such as basic concepts in economics, theory of consumer behaviour, Indifference curve, demand and supply, elasticity, laws of returns and capital formation. It is prepared such that it might be used in exams exactly as it is.

Agricultural Economics is an applied discipline that examines the economics of agricultural commodity production, marketing, exchange, and consumption in the economy. It largely focuses on how a society decides to use its limited resources, which have alternative uses, to produce things for both current and future consumption. Due to this shortage, people are forced to choose between options, and economic knowledge is utilised to compare the options and select the best one. For example, a farmer can grow paddy, sugarcane, banana, cotton etc. in his garden land. But he has to choose a combination of crops depending upon the availability of labour and irrigation water. The emergence of economic problems is caused by two key reasons.. They are: (i) the existence of unlimited human wants and (ii) the scarcity of available resources. The existence of human wants is the starting point of all economic activity in the world. Unless we make efforts, we cannot satisfy wants. Hence, wants, efforts and satisfaction form the circle of economics. Thus, the science of economics focuses around want - effort - satisfaction.

Economics and Reasonability The four primary economic activities of production, distribution, consumption, and resource management are what we referred to as economic actors or economic agents in Chapter 1. Individuals, small groupings (such as a family or a group of roommates), as well as big businesses like the government or international corporations, can all engage as economic agents. Economics is the study of these actors’ actions and interactions during economic transactions. This chapter examines how people behave as independent economic players. We analyse this subject’s ramifications for economic theory and examine both historical and recent research on it. Perspectives from History on Economic Behavior A social science, economics is concerned with people and how we arrange ourselves to meet our wants and improve our well-being. All economic behaviour is ultimately just human behaviour. Even though institutional factors can sometimes appear to gain control (as evidenced by some bureaucracies’ propensity to grow over time), if you look closely at economic outcomes

Goods can be classified as follows Free goods: Goods which are not scarce and available at free of cost are called free goods. Eg: air. Economic goods: Economic goods are scarce and one has to pay a price for it : eg: Rice, pen, cloth etc. Visible and Invisible goods: Things which can be seen and felt can be called as visible goods. Such goods are also called as tangible good. Eg. Rice, bicycle. Invisible goods are also called as services or intangible goods. We cannot see or feel those goods. Eg. Copyright of a book, service of a doctor. Consumer goods and capital goods (Producer goods): Consumer goods satisfy our wants directly. Eg. Rice, Pen, etc. Goods like machinery, equipments will not satisfy our want directly but used for further production

Agriculture economics is the study of how resources are used, distributed, and utilised in order to create agricultural products. A consistent level of farm surplus is one of the sources of technological and commercial expansion, so agricultural economics has an impact on the economics of development. In general, it may be said that average salaries are low when a sizable portion of a nation’s population depends on agriculture for a living. It is more accurate to argue that a country’s majority of people must rely on agriculture because it is impoverished rather than that a country is poor because the majority of its population works in agriculture. Features of Agriculture Agriculture is the principal industry of employment. Nearly 61 percent of the whole population is employed there. It makes up 25% of the country’s income. Monsoon dependence: The monsoon is crucial to Indian agriculture. The production will increase if the monsoon is good, and the crops will fail if it is below normal. Floods can occasionally ruin our crops. Agriculture depends on the rainfall since irrigation systems are so poor.

Demand: Wants that are supported by a price at which they can be purchased are called demand. It is a relationship that, ceteris paribus, depicts the various quantities of a good that buyers would be able and willing to buy at various prices at a particular point in time. Demand Schedule: It is a table that displays different quantities of a good that consumers would be willing and able to buy at different prices at a specific moment, ceterius paribus. Demand curve: A demand schedule is a graph that displays the various quantities of a good that buyers would be able and willing to buy at various prices at a specific point in time, according to Ceterius peribus. It in turn fuels growth by increasing demand for industrial goods.. The arc slopes left to right in a descending direction.

Marshall was the frst to establish the idea of elasticity. According to the law of demand, if the price increases, fewer units will be sought for. But it’s crucial to know how much less will be expected of it. Such inquiries are crucial when formulating public policy. For instance: A price rise for salt might not have much of an effect on demand, but a price increase for TV will have more of an effect. Why? The idea of elasticity provides an answer to such queries. In economics, the concept of “elasticity” is frequently used to describe how responsive one variable is to changes in another.: Elasticity of demand Demand elasticity generally refers to demand’s sensitivity to price. However, there are as many levels of elasticity as there are demand determinants. The most important Elasticities are: Determinants of demand Elasticity

According to the theory of production, the entrepreneur seeks to maximise his earnings. The goal of a proft-maximizing businessperson is to maximise production for a given amount of investment, or, to put it another way, to reduce expense. Meaning of Production Producing items and services with a market value is referred to as production in economics. It refers to the development of utilities. These services fall under the categories of form, time, and place utilities. The establishment of such utilities boosts the economy’s total production and redistribution of commodities and services. A commodity’s utility could rise for a variety of reasons. Form Utility If the physical form of a commodity is changed, its utility may increase. For instance, the utility of cotton increases, if it is converted into clothes. The other examples are processing of paddy into rice, wheat into four and butter into ghee.

Theory of Costs In both short-run and long-run analyses, there exist different cost curves. Short run is the duration of a given factor or factors. Equipment and business owners are typically fxed in the near term Long run is the period over which all factors become variable. Fixed costs: are those expenses that remain constant regardless of output or production levels.. Eg: depreciation, annual maintenance cost etc. Variable cost: are those expenses that change depending on the volume of output eg : inputs/raw material costs, wages etc. Short Run Cost Curves There are seven cost concepts or curves in short run analysis. They are : Total cost (TC) Total Fixed cost (TFC)

Supply Supply refers to the good being sold at a specific price and moment. Supply is the quantity of a commodity that is actually made available for purchase at a specific price and moment. The various quantities of a commodity that would be available for sale at varying prices are referred to as the supply schedule. Supply schedule of Rice The supply schedule for the whole market is called market supply. It is arrived at by adding the quantities supplied by all the sellers at varying prices. The increasing portion of the marginal cost curve is used to create

When it comes to the fow of goods and services from the point of production till they reach the hands of fnal consumers, marketing is defned as “the performance of all business operations involved in that fow.” Market structure is defned as “those aspects of the market’s organisation that appear to strategically infuence the nature of competition and pricing inside the market.”The market structure is decided by the following factors in general. Number and size of the frms. Degree of product differentiation. Conditions for entry and exit. Flow of market information. Degree of integration.

The economics of distribution “accounts for the sharing of the wealth produced by a community among the agents of the owners of the agents which have been active in its production”. - Chapman The division of the national dividend or aggregate national income among the different agents of production viz., rent for land, wage for labour, interest for capital and proft for entrepreneur is termed as distribution in economics. Factor Market A factor market is a market where factors of production are bought and sold. Factor markets allocate factors of production, including land, labour and capital, and distribute income to the owners of productive resources, such as wages, rents, etc. In the factor market it is not acres of land which is being bought or sold but the services of land. Similarly neither the labour nor capital goods are being bought and sold but the services of labour and capital. Thus rent is not the price of land but

Macroeconomics approaches the economic problems in terms of aggregates like national income, general employment level, aggregate demand, aggregate production and so on. The important among the above is national income. The one common thing to all products is value. Therefore, the national income must be expressed in monetary terms. The entire value of the goods and services (output) produced by an economy over time is measured by national income (normally a year). It also serves as a measure of the money generated by production and/or the total amount of expenditures made in order to produce the output. Significance The Central Statistical Organization of India has been calculating the country’s gross domestic product. We can measure your academic performance in relation to other students by the percentage of the marks scored by you. Similarly a country’s economic performance has been measured by indicators of national income such as GDP or GNP. Additionally, it is crucial to measure national income for a number of reasons, such as making predictions about how the economy will develop in the future,

Theories of Population The theory of population is studied because the supply of labour depends upon population and its growth. Observing the abnormal growth of population and consequent fall in the standard of living, Thomas Malthus (1760-1834) an English Clergyman frst studied population growth in various countries of Europe. Later he wrote a book entitled “An Essay on the Principles of Population” in 1798. His his theory is popularly known as Malthusian theory of population. To quote the theory in his own words “By nature human food increases in a slow arithmetic ratio, man himself increases in a quick geometric ratio unless want and vice stop him”

Money Money has made rapid economic progress possible in this modern age. In the early stages, exchange took the form of barter The direct exchange of one good for another is known as barter. For instance, the potter received paddy from the farmer in exchange for cooking pots. Barter became more challenging as there were more items to trade. Silver and other precious metals were thus utilised as currency. Then the paper currencies were used as legal money, i.e., an instrument of exchange, by the governments. Definition of Money Anything that the general public readily accepts as payment for products, services, other assets, and the discharge of debt is referred to as money. Robertson defned money, “as anything that is acceptable in discharge of obligations”. According to Crowther, “Money is anything that is generally acceptable as a means

Banks and Banking On account of multifarious activities of modern banks, the Bank and Banking has been defned by several economists as follows: The defnition of a banker given by Dr. L. Herber and L. Hart is “one who, in the ordinary course of business, honours cheques made upon him by persons from and for whom he receives money on current accounts.” Chamber’s Twentieth century Dictionary defnes a bank as an, “institution for the keeping, lending and exchanging etc. of money”. The purpose of a banker, in Crowther’s words, is to produce money by accepting other people’s loans in exchange for his own. A bank, according to Professor Kent, is “an entity whose main activities entail the collection of the momentarily idle money of the general public for the purpose of advancing to others for consumption.”

Public Finance Public finance is a branch of economics which deals with the income and expenditure of public authorities such as Central Government, State Government, Corporations, Municipalities etc. Public finance, according to Adam Smith, is the study of the nature and guiding principles of government spending and revenue. Micro Finance vs. Macro Finance Microfinance and macro finance represent two types of funding-related activities. The difference lies in their scope. Microfinance is an individual-focused, community-based approach to provide money and/or fnancial services to money to poor individuals or small businesses who lack access to mainstream or conventional resources. 

Tax A tax is a mandatory fee or fnancial charge levied by any government on an individual or an organization to collect revenue for public works providing the best facilities and infrastructure. The collected fund is then used to fund different public expenditure programs. Direct and Indirect taxes Types of tax system Proportional tax: No matter the tax base’s relation to income size, the tax rate is always the same proportion. Taxing is according to the proportion of income. In this system poor people will be hit hard. Progressive tax: Distribution of tax in a more just manner. People with higher income are charged with higher rates of tax. Eg. Income tax. Regressive tax: Burden of payment will be more on poor. Taxes are charged from the poor at a higher rate than from rich. Ex. Commodity taxes – Affects poor rather than rich.

Economic System The three economic problems What, How and to whom to produce are common to all societies or economics. But different countries follow different approaches to solve basic economic problems. These approaches are called economic systems. There are 3 important economic systems. Command economies Market economies and Mixed economies Command economies (Socialist economies): In a system like this, the government controls all aspects of production and distribution. Such a government might be dictatorial or it might be democratic. Main features of socialism are public ownership of means of production, Economic planning, Economic equality, lack of competition, elimination