AREC 533 PRODUCTION ECONOMICS Winter Term 2013

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AREC 533

PRODUCTION ECONOMICS Winter Term 2013

Lecture B1: Tues/Thurs 11:00-12:20 pm GSB 511 Lab H1: Fri 2:00-4:50 pm GSB 553

Instructor: Henry An Office: GSB 551 Phone: 492-3915

Email: [email protected] Office hours: By appointment Course Description

This course is concerned with issues related to the theory and application of production economics. Subject matter includes traditional neo-classical theory of the firm, duality theory, and other issues and topics related to agricultural production economics. Theoretical models and empirical applications are introduced and discussed.

Course Text

There is no text required for this course. As noted below, and in the reading list, several references are used during the course. Chambers, as well as Beattie and Taylor, provide coverage of production economics at the graduate level, although the approaches taken by the two books are significantly different. Coelli et al. deals with topics related to productivity and efficiency measurement. Doll and Orazem also provides adequate coverage of many topics, at a senior undergraduate level. Henderson and Quandt, and Varian are examples of graduate level microeconomic texts that discuss the theory of the firm. Other references (e.g., journal articles, working papers) will be used as needed.

Course Evaluation

Final grades are based on performance on assignments, a term paper, a midterm examination and a final examination.

Grading scheme:

Assignments (2) – 10%

Midterm Examination – 20%

Term Paper – 35%

Final Exam – 35%

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2 Key dates

 Thu Feb 7 - Term paper outline due

 Thu Feb 14 - Assignment 1 due

 Tue Feb 26 – Midterm exam

 Thu Mar 14 - Assignment 2 due

 Tue Apr 9 - Term paper presentations

 Fri Apr 12 - Term paper due

 Wed Apr 17 @ 9:00 am - Final exam (subject to change)

Assignments

There will be two (2) assignments required for AREC 533, worth a total of 10% of the course grade. Additional information about the assignments will be provided in class.

Term Paper

As part of completing this course, students are required to write and submit a paper. This paper is worth 35% of the final grade. The term paper will consist of three components: (1) outline (5%), in-class presentation (10%) and final write-up (20%). The term paper is due by 4:00 p.m. on the last day of classes for the winter 2012 term; that is, Friday, April 12.

The topic of the paper will relate to some aspect of applied production economics. The paper should involve the investigation of some economic problem and should include relevant empirical analysis. Where possible and appropriate, the discussion in the paper should make use of current literature relating to the economic problem and/or methodology.

Papers will be evaluated in terms of content and presentation. However, the evaluation will focus on the understanding and application of economic theory as it relates to production economics. The paper should be submitted in typed, double-spaced format, and should not exceed 20 pages (including everything).

Please note that submission of an initial term paper outline is required as part of completing the term paper. In addition, each student will be required to present his/her term paper to the class. In accordance with the guidelines of the Canadian Agricultural Economics Society annual meetings, each presentation should be between 15-20 minutes. This time limit will be strictly enforced as they normally would be at the annual meetings. Each paper will also have a discussant (i.e., fellow classmate). More details will be provided in class. More information about the term paper and the initial outline will be provided in class. All topics must be approved by the course instructor.

Examinations

The midterm examination is scheduled for Tuesday, Feb 26 and will be held during class time.

The final exam is cumulative and will be held during the exam period in class, tentatively scheduled for Wednesday, April 17 at 9:00am. Details will be provided at a later date.

Recording of Lectures

Recording is permitted only with the prior written consent of the instructor or if recording is part of an approved accommodation plan.

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3 Academic Integrity

You should treat this class as you would a job. Therefore, I will hold you to the same standards for ethics and for timeliness that is expected from an employee. Distracting behaviour such as uninvited casual talk among students, use of cellular phones, disruptive eating, sleeping, or inappropriate behaviour toward fellow students or faculty will not be tolerated any more than they would be in a business setting. Faculty members have the right and the responsibility to maintain a classroom free of such distractions. Students who persist in such behaviour may be asked to leave the class or it may result in withdrawing the student from the course.

Students maintain academic integrity by doing their own work, by refusing to assist others in deception, and by being honest with themselves and others. Academic dishonesty violates the academy integrity expected of all students.

Academic dishonesty is defined as, but not limited to, the following:

1. Cheating - Using or attempting to use unauthorized materials, information, or study aids in any academic exercise, including copying form another person's work or preparing work for another that is to be used as that other person's work.

2. Fabrication - Furnishing false information to a University official relative to academic matters, including, but not limited to, misrepresentation of written information provided in the student's admission documents.

3. Plagiarism - Representing the words or ideas of another as one's own in any academic exercise.

4. Facilitating Academic Dishonesty - Helping or attempting to help another to violate any provision of this Code.

For this course, the bottom line is: Any violations of points 1 to 4 will result in my awarding a failing grade in the class, and all violations will be reported to the appropriate university officials. Please consult section 30.3.2 of the University Of Alberta Code Of Student Behaviour for more information, and consider also the following:

(1.) Policy about course outlines can be found in Section 23.4(2) of the University Calendar.

(2.) The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.ualberta.ca/secretariat/appeals.htm) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University. (GFC 29 September 2003)

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4 Course Outline

Review (not covered in class) I. Introduction

II. Technology and Production Functions III. Theory of the Firm

IV. Duality

V. Technical Change

Section I. Introduction

 What is production economics?

 Why study production economics?

 Overview of the course

Section II. Technology and Production Functions

 Definitions and assumptions

 Technical substitution

 Factor dependence

 Returns to scale

 Separability

 Functional forms

 Empirical considerations

Section III. Theory of the Firm

 Profit maximization

 Cost minimization

 Introduction to duality

Section IV. Duality

 Cost functions

 Profit functions

Section V. Technical Change

 Introduction

 Measurement of technical change

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5 General References

 **Beattie, B.R., and C.R. Taylor. The Economics of Production. John Wiley & Sons, Inc.

New York, NY. 1985. (Second edition, 2009, is also okay)

 **Chambers, R.G. Applied Production Analysis: A Dual Approach. Cambridge University Press. Cambridge. 1988.

 Coelli, T., D.S.P. Rao and G.E. Battese. An Introduction to Efficiency and Productivity Analysis. Kluwer Academic Publishers. Boston, MA. 1998.

 Doll, J.P. and F. Orazem. Production Economics: Theory with Applications. 2nd Edition. J.

Wiley & Sons. New York, NY. 1984.

 Henderson, J.M., and R.E. Quandt. Microeconomic Theory: A Mathematical Approach. 3rd Edition. McGraw-Hill. New York, NY. 1980.

 Varian, H.R. Microeconomic Analysis. 3rd Edition. W.W. Norton & Company. New York, NY. 1992.