NSC 150 Exam 3 Review.docx - NSC 150 Exam 3 Review Chapter 7 Food System Economics Basics of economics o Optimizing under constraints Doing the best you

NSC 150 Exam 3 Review.docx - NSC 150 Exam 3 Review Chapter...

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NSC 150 Exam 3 Review Chapter 7: Food System Economics Basics of economics o Optimizing under constraints Doing the best you can with what you have People, firms, organizations, families, and farms are all optimizing Reaching equilibrium Under ideal conditions, markets are efficient Market failure- when the most efficient market is not achieved Externalities o A cost of providing the product or service is imposed on people not involved in the transaction Water pollution stemming from agricultural production o Solutions Taxes- per unit fee on production/consumption Subsidies- per unit discount on production/ consumption Cap and trade system- set upper limit on pollution Imperfect competition o Not many buyers and sellers o Disproportionate power (affects prices) o Monopolies Information asymmetry o Between buyers and sellers about a product o Hamper good food consumption decisions (GMOs) Behavior constraints o Affect optimization o We don’t always make rational decisions Econ on food consumption o Taxes can reduce negative externalities associated with unhealthy food o Law of demand- as price of a good rises, demand decreases o Price elasticity of the good Between 0-1: inelastic (absolutely need the good) Equal to 1- unit elastic Greater than 1- elastic Chapter 8: Policies that shape the US food system Food policy o Policies are institutional rules Regulating, taxing, providing incentives, creating mandates and building infrastructure o Policy is a driver of behavior and the food system o Types of legislation Authorizing
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Creates a new federal program Extends the life of an existing program Repeals existing laws Appropriation Allocates funds Entitlement programs Provide benefits Guarantees access to all who qualify SNAP, Medicare o The Farm Bill Largest food policy in the US Omnibus Bill= cover multiple, diverse or unrelated topics Agriculture, conservation, rural development, research and food assistance Legislative responsibility of Ag Committees in Congress Title I: Commodities Corn, soybean, cotton, wheat Grown in large quantities Stored and traded easily US government controls commodity prices o Supply management o Establish and enforce a fair price o Pay farmers the difference between current prices and a target fair price (2001 required $20 billion bailout) o Pros: low prices (makes processed food cheaper and makes CAFO operational) o Cons: Incentivizes farmers to grow lots of commodity crops, lack of diversity leads to environmental problems Title II: Conservation Goal: to create the most sustainable and efficient agricultural industry 1985 Farm bill created: o Conservation Reserve Program (CRP) o Wetlands Reserve Program (WRP) 1996 farm bill added: o Environmental Quality Incentives Programs (EQIP) o Wildlife Habitat Incentive Program (WHIP) o Conservation Security Program (CSP) Title III: Trade
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  • Spring '17
  • Verinica Mullins

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