ABSTRACT
A solid understanding of microeconomic principles underlies many of the decisions made by agribusiness managers. This chapter shows the differences between accounting and economic profits, and how the concept of economic profit explains firm behavior. Good managers have a deep understanding of how the various supply and demand shifters affect market equilibrium. Various elasticities of demand are used to serve as a decision tool to help managers anticipate how changes in price, income, or other prices will affect the quantity demanded.
