10 principals of economics and agriculture:

1.    People face tradeoffs— “Society should not stop protecting the environment just because environmental regulations reduce our material standard of living” (Principal 1). The agriculture industry faces the tradeoff between economic incentives and environmental incentives.

2.       The cost of something is what you give up to get  it—The opportunity cost of producing crops includes resources necessary to produce (including water, fertilizers, pesticides, etc.), as well as, the time it takes for the crops to grow and care needed to grow them.

3.       Rational people think at the margins—“Mak[ing] decisions by evaluating costs and benefits of marginal changes” (Mankiw). The agriculture industry must make decisions at the margin about whether to implement sustainable methods or changing their practices.

4.        People respond to incentives—Farmers receive incentives from the government to farm using sustainable methods. The increased demand for environmental friendly products is another incentive for famers to practice sustainable farming.

5.       Trade can make everyone better off—Certain countries have the proper environments to grow certain foods. Trade allows countries to specialize in food production.

6.       Markets are usually a good way to organize economic activity—A market is a group of buyers and sellers. A market economy allows the buyers to determine what firms produce based on what they buy. With an increase in environmental consciousness the increase in demand for sustainable food products have driven agricultural industry to shift towards sustainable methods. 

7.       Governments can sometimes improve market outcomes—The government can provide subsidies to farmers to promote sustainable products. It is also then their job to monitor Market failure. (See Market Failure Post for more detail).

8.       A country’s standard of living depends on its ability to produce goods & services—If a country can produce enough food to sustain itself it can have a higher standard of living because it is not reliant on another country for resources. Countries can also use excess crop production as exports. Along with other economic activity the export and self reliance on agriculture increases countries GDP.

9.       Prices rise when the government prints too much money—Although not directly related to the agriculture industry, inflation causes a shift increasing the price for the resources used by farmers and therefore the price of crops increases.

10.   Society faces a short-run tradeoff between inflation and unemployment-- Although not directly related farmers feel the effects of inflation and unemployment.

For further information about the ten principals of economics read chapter one in The Principals of Economics by Gregory Mankiw

To listen to a lecture concerning the ten principals of economics click the link > http://www.youtube.com/watch?v=VVp8UGjECt4

Sources:

Mankiw, Gregory N. "Ten Principals of Economics." The Principals of Economics. N.p.: South Western, 2009. N. pag. Print. 
"Principle 1: People Face Tradeoffs." Help for Principles of Economics, Economics, Homework Help. N.p., n.d. Web.

                16 Dec. 2012.
Video Source:
"Principles of Economics, Translated." YouTube. YouTube, 25 Feb. 2007. Web. 17 Dec. 2012.