Thursday, January 29, 2015

Nice illustration of shift in crop production in the US(1990-2015). Good lesson on Allocative Efficiency

A nice visual showing how the allocation of agricultural land used for large scale farming has shifted in what it produces over time.  This can be the result of a change in consumer tastes, technology, environmental conditions or government policies.

In a basic economics class we refer to this as "allocative efficiency".

In Macroeconomics we identify it as a point anywhere on the Production Possibilities Frontier indicating a particular bundle of goods produced at its lowest cost (Productive Efficiency) and most desired by consumers

In Microeconomics we identify is at the point where the Price (P) equals the Marginal Cost (MC) of producing the last unit(s).  The price consumers are willing and able to pay and amount that at least equals the cost of the productive resources used to produce that unit.

Any hoot, this can be part of a lesson in allocation of resources and to pose the question "Why the movement away from Wheat production to Corn and/or Soybean?"

Found on Twitter and credited to The US Dept of Agriculture (that is all I know).

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