**DESCRIPTION OF COURSES**

**AG ECON 521 AGRICULTURAL PRODUCTION AND RESOURCE ECONOMICS II (PRODUCTION FUNCTION ANALYSIS) (2L+1P) II
(Pre-requisite: Ag Econ 501 **)

**Objective**

This course deals with the production concept and the various types production functions. The dualities between production, cost and profit function is discussed. The derivation of supply and factor demand functions from profit functions is also covered.

**Theory**

UNIT I (PRODUCTION FUNCTIONS)

Production concepts. Resource product relationship in agriculture. Important historical background and characteristics of different forms of production functions-linear, quadratic, square root, Spillman, cubic, semi-log, Cobb-Douglas optimisation, CES, VES and Leontief. Frontier production function. Production surfaces, isoquants and isoclines, economic application.

UNIT II (MANAGEMENT OF FARM RESOURCES)

Principles of choice and resource allocation. Price and production relationship. Resource combination and cost minimisation, optimisation of inputs use under various resource conditions. Multiple product relationship. Production possibility curves. Choice between products and resource use. Spatial and temporal allocation of resources. Returns to scale and farm size. Analysis of factor shares in agriculture and their implications on income distribution.

UNIT III (COST AND PROFIT FUNCTIONS AND THEIR APPLICATIONS)

Dualities between production, cost and profit functions; Derivation of supply and factor demand functions from production and profit functions.

UNIT IV( RISK AND UNCERTAINTY)

Optimization under risk and uncertainty; optimisation over time.

**Practicals**

Different forms of production functions - specification, estimation and interpretation of production functions – returns to scale, factor shares, elasticity of production - physical optima-economic optima-least cost combination- optimal product choice- cost function estimation, interpretation- estimation of yield gap - incorporation of technology in production functions- measuring returns to scale, risk analysis through linear programming

**Suggested Readings**

- Beattie, B.R. and Taylor, C.R. 1985.
*The Economics of Production*. John Wiley & Sons. - Doll, J.P. and Frank, O. 1978.
*Production Economics - Theory and Applications*. John Wiley & Sons. Gardner, B.L. and Rausser, G.C. 2001.*Handbook of Agricultural Economics*. Vol. I.*Agricultural Production*. Elsevier. - Heady, E.O.
*Economics of Agricultural Production and Resource Use*. Prentice- Hall. - Sankhyan, P.L.
*Introduction to the Economics of Agricultural Production*, Prentice Hall of India Pvt ltd.