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Research Articles

Teaching and Educational Methods

Tractable Cubic Cost Functions for Teaching Microeconomics

Scott M. Swinton and Hanzhe Zhang

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Posted online: June 2, 2021
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Abstract: Classes in microeconomics typically use cubic cost functions because they can exhibit marginal costs that fall as output increases to some efficient level, and then rise thereafter. Cubic cost functions embody economies of scale, making it easy to illustrate that concept with quadratic average cost curves. However, designing problems with cubic cost functions is harder than it looks because well-behaved functions must meet several mathematical and economic restrictions. Yet as instructors develop more online assignments and exam questions, they face the need to produce varied problems that support the same learning objectives. This article explains the restrictions needed to generate well-behaved cubic cost functions. It proceeds to show how to generate random parameters for well-behaved cubic cost functions for problems that meet common student learning objectives. An associated workbook contains the algorithms described here.

Keywords: Cubic cost function, marginal cost, profit maximization

Extension Education

Case Studies

The Future of Four Creeks Farm: Scale-Up, Diversify, or Exit?

Olesya M. Savchenko, Patrick M. Fleming, and Kellie Zambito

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Posted online: June 2, 2021
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Abstract: This decision-scenario case study is designed to be suitable for both online and face-to-face instruction in an undergraduate-level agribusiness, agricultural policy, or business strategy course. The case challenges students to assume the role of decision makers for a struggling family-owned dairy farm to determine whether the farm should scale-up, diversify, or exit the industry. Students will (1) learn about the unique features of the U.S. dairy market and domestic government support policies for dairy farms, (2) understand the challenges facing small family-operated farms, (3) apply strategic management tools to analyze and select the best strategic option to ensure short-term and long-term survival of the farm, and (4) advance critical thinking and decision-making skills. This case study is versatile and can be adapted to a variety of classroom settings. It can also facilitate broader discussions of management decisions facing agricultural businesses operating outside of the dairy industry.

Keywords: Agricultural policy, family-owned dairy farms, government policy, PESTEL analysis, strategic planning, U.S. dairy industry

Market Power in the Fluid Milk Industry in the Eastern United States

Yuliya V. Bolotova

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Posted online: May 26, 2021
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Abstract: The motivations for this case study are recent developments in the fluid milk industry in the Eastern United States. These developments reflect the effects of increasing consolidation and concentration as well as emerging competition issues related to the buyer and seller market power of fluid milk processors. Using a marketing margin framework, this case study provides simple contemporary applications of the economic models of the profit-maximizing behavior of firms possessing buyer and seller market power in the fluid milk processing industry. The case study illustrates a marketing margin analysis, as applied to the fluid milk supply chain, including a basic empirical market and price analysis. The intended audiences are undergraduate and graduate students as well as extension and outreach audiences. The case study includes a teaching note with a set of discussion questions and suggested answers. In addition, the teaching note discusses teaching objectives, teaching strategies, and student background knowledge.

Keywords: Antitrust, Capper-Volstead Act, cooperatives, fluid milk industry, Federal Milk Marketing Orders, margins, oligopoly, oligopsony, price-fixing, Sherman Act

Teaching and Education Commentaries

Feature Articles

Best Practices and Lessons Learned in Grant Writing for Ag/Applied Economists to Engage in Interdisciplinary Studies

Chyi-Lyi Liang, Siân Mooney, Lyubov Kurkalova, D. Keith Roper, and Leila Hashemi-Beni   

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Posted online: May 24, 2021

Abstract: Learning to write successful grant applications takes significant time and effort. This paper presents knowledge, expertise, and strategies from experienced grant applicants and grant officers across several disciplines to support early career scholars and first-time grant writers, with particular guidance for interdisciplinary collaboration. Many Agricultural and Applied Economists are invited to participate in interdisciplinary grant applications. It is important to fully understand the types of projects, nature of collaboration, co-investigators’ characteristics, expected contributions, anticipated benefits, and valuation of collaborative research by one’s peers before initiating new opportunities. Leading and participating in interdisciplinary teams also requires mentorship, patience, professionalism, and excellent communication beyond the scientific merits. This paper shares practical insights to guide scholars through the grant-writing processes beginning with nurturing a mindset, preparing for a consistent work ethic, actively seeking advice, identifying targeted programs, matching a programs’ priorities, a step-by-step framework for team creation and management, effectively managing time and pressure, and transforming failure into success.

Keywords: Early career scholars, grant collaboration, grant writing, interdisciplinary, proposal

Special Issue on Innovations in Teaching Environmental and Resource Economics

Seeds of Learning: Uncertainty and Technology Adoption in an Ecosystem-Based Adaptation Game

Babatunde Abidoye, Sahan T.M. Dissanayake, and Sarah A. Jacobson

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Posted online: May 11, 2021
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   Adaptation Incentive Recording Sheet
   EBA Game Handout  
   EBA Game Handout 4Page
   EBA Game Instructions
   EBA Game Instructor How-To
   Extensions and Modifications
   Seeds of Learning - Game Play Slides
   Suggested Readings

Abstract: We introduce an interactive game exploring ecosystem-based adaptation (EBA) to climate change, with a focus on technology adoption and uncertainty. The game is useful in academic classes and training sessions for policy makers and stakeholders. Participants play the role of small-scale farmers in a developing country where their farming practices cause erosion that pollutes waterways, while at the same time climate change is making farmers more vulnerable to natural threats like flooding. The game gives participants a series of opportunities to adopt EBA practices: for example, a riparian buffer strip, low-till farming, and agroforestry. The practices differ in the uncertainty surrounding their effects on yields. The game deploys three policies to encourage adoption: a flat payment, a conservation auction, and a flat payment with a pilot bonus for early adoption. Players observe each other’s choices and outcomes, which allows for social learning. Participants get a hands-on understanding of climate change’s impacts, adaptation, ecosystem services, payment for ecosystem service programs, choice under uncertainty, social learning, adoption of new technology, learning spillovers, cost-effective conservation, and conservation auctions. We provide all materials necessary to run the game, a list of suggested readings, and ideas for discussions and assignments.

Keywords: Classroom game, climate change adaptation, ecosystem-based adaptation, payments for ecosystem services, technology adoption, uncertainty

Managing a Multiuse Resource with Payments for Ecosystem Services: A Classroom Game

Lauriane S. Yehouenou, Stephen N. Morgan, and Kelly A. Grogan

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Posted online: April 22, 2021
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Abstract: This article presents a classroom experiment that introduces students to the concept of payment for ecosystem services (PES) applied to a multipurpose renewable forest resource. Through a natural resource management game, students can analyze how PES programs may alter the individual and group harvest decisions and stocks of both components of the multipurpose resources. Participants can choose between harvesting whole trees for timber, harvesting leaves for fodder, or some combination of both. In each round, students choose the quantity of both resources to harvest for profit. Students complete the experiment with and without the PES program to enable comparison of decisions across management regimes. The outcome (usually complete forest removal) at the end of the game helps demonstrate the tragedy of the commons in the absence of conservation policies.

Keywords: Classroom, ecosystem services, experiments, natural resource management, payments for ecosystem services

Making Learning about Climate Change Fun and Interactive

Misti D. Sharp and Jada M. Thompson

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Posted online: April 22, 2021
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Abstract: Climate change policy is a challenging subject to teach to undergraduates as it requires knowledge of a complex physical system (our planet) combined with an understanding of our global social-political-economic structures, which engender puzzling, yet, predictable behavior by participants. Further complicating this learning environment are the personal and social implications of choosing to combat climate change versus allowing others to address the problem (i.e., free-riding). To simulate the complex decision environment for climate change policy making, a “public good game” classroom experiment is a useful activity that allows students to make decisions regarding the provision of a public good (climate mitigation) while observing how their behavior and the behavior of others results in benefits (or costs) that are shared by all. In this paper, six public good games are played by students in an undergraduate environmental economics course with different parameterizations in each game simulating different aspects of climate change negotiations that can help explain why some policies related to climate change succeed while others fail. Special considerations for face-to-face versus online implementation are explored.

Keywords: Classroom, ecosystem services, experiments, natural resource management, payments for ecosystem services