Download By Choice – What We Eat

By Choice – What We Eat
1
STEVE FRIES
JULY 2011
WEEKEND INTENSIVE
Economics – a brief review
2
 Macroeconomics
 Aggregate
 Microeconomics
 Individual
Units
 Positive Economics
 Facts,
Data, Cause & Effect
 Normative Economics
 Value
Judgments, Desirability of Certain
Economic Aspects
Individual’s Economizing Problem
3
 Limited Income
 Unlimited Wants
 Attainable and Unattainable
Combinations
 Tradeoffs & Opportunity Costs
 Choice
 Income Change
Society’s Economizing Problem
4
Scarce Resources
Resource Categories
Land
Labor
Capital
Entrepreneurial
Ability
Factors of Production
Theory of the Firm
5
Expected Value Maximization
 Owner-managers
maximize short-run profits
 Primary goal is long-term expected
value maximization
Constraints and the Theory of the Firm
 Resource
constraints
 Social constraints
 Competition forces efficiency
Stakeholders
6
Food Industry’s Contribution to U.S. Economy
7
 Food industry is about 7% of GDP (consumption
and investment)
 Employment is about 10% of total U.S. employment
Opportunity Costs
8
Opportunity Cost – This is the foregone
value of the next best alternative
Utility is the satisfaction one gets from
consuming a good or service
o Not the same as usefulness
o Subjective
o Difficult to quantify
Consumer Behavior
9
• Rational behavior
• Preferences
• Budget constraint
• Prices
Total Utility and Marginal Utility
10
(1)
(2)
(3)
Tacos
Total Marginal
Consumed Utility, Utility,
Per Meal
Utils
Utils
0
1
2
3
4
5
6
7
LO1
0
]
10
]
18
]
24
]
28
]
30
]
30
]
28
10
8
6
4
2
0
-2
Marginal Utility (Utils)Total Utility (Utils)
Total Utility
TU
30
20
10
0
1
2
3
4
5
6
7
1
2
3
4
5
6
7 MU
10
8
6
4
2
0
-2
6-10
Role of Business in Society
11
 Why Firms Exist
 Business is useful in satisfying consumer
wants.
 Business contributes to social welfare
 Social Responsibility of Business
 Serve
customers.
 Provide employment opportunities.
 Obey laws and regulations.
Business & Societal Environment
12
Government Regulation of Business
13
 Regulation
The action of government to establish rules of conduct
for citizens and organizations. It is a primary way of
accomplishing public policy.
 Reasons for regulation
 Market
failure
Aim
to modify the normal operation of the free
market and the forces of supply and demand
 Ethical
 Aimed
rationale
at such important social goals as protecting
consumers and the environment and providing
workers with safe and healthy working conditions
Spending on U.S. Regulatory Activities
14
About 1% of GDP
Staffing of U.S. Regulatory Activities
15
U.S. Food & Drug Administration
16
Formed
1906
Preceding agencies
Food, Drug, and Insecticide Administration (July 1927 to July 1930)
Bureau of Chemistry, USDA (July 1901 through July 1927)
Division of Chemistry, USDA (Established 1862)
Jurisdiction
Federal government of the United States
Headquarters
10903 New Hampshire Ave, Silver Spring, MD 20903
Employees
9,300 (2008)
Annual budget
$2.3 billion (2008)
Agency executive
Margaret A. Hamburg, Commissioner of Food and Drugs[2]
Parent agency
Department of Health and Human Services