290063 Applied Production Analysis

Responsible DepartmentInstitute of Food and Resource Economics

Earliest Possible YearMSc. 1 year to MSc. 2 year
DurationOne block
Credits7.5 (ECTS)
Level of CourseMSc
ExaminationFinal Examination

oral examination

Some Aid allowed
Students will get their solution to the selected homework assignment, no other aid allowed.

Description of Examination: Students will be asked to present their solution to one randomly selected homework assignment. Furthermore, they are expected to answer questions regarding other topics of the course.

Weight: 100%

7-point scale, internal examiner
Block PlacementBlock 2
Week Structure: C
Language of InstructionEnglish
Optional Prerequisites290055 Micro Economics
290058 The Economics of Food Production
Knowledge in basic microeconomic production theory is required.
Mandatory Prerequisites290068 Applied Econometrics
This course can be replaced by an equivalent course.
Course Content
This is an applied course that focusses on practical and empirical applications based on a theoretical foundation.

The course will cover, for instance, following topics:
o advanced primal microeconomic production theory
o econometric production analysis based on primal approaches in microeconomic theory, interpretation of estimation results, further analysis based on estimation results
o dual approaches in microeconomic production theory: cost minimization and cost function, profit maximization and profit function
o econometric production analysis based on dual approaches in microeconomic theory, interpretation of estimation results, further analysis based on estimation results
o functional forms in applied production analysis such as Cobb-Douglas, Translog, etc.
o efficiency analysis using Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA)

The free statistical software "R" is used for the empirical calculations. For students new to "R" an introduction to the relevant parts of "R" is given. Introductions to relevant "R" packages are given in the classroom exercises.
Teaching and learning Methods
The course is based on problem-based learning, dialogue teaching, and practical and empirical exercises. Microeconomic production theory is presented in lectures. To facilitate students' learning, lectures are followed by group-based exercises. These exercises are partly conducted in the classroom under guidance of the teacher and partly conducted as homework assignments. Most of the exercises are done on a pc.
Learning Outcome
The main objective of the course is to provide the students with relevant knowledge, practical skills, and competences in applied microeconomic production analysis.

The reason for the course is that politicians, business organizations, government administration, financial institutions, EU, and other national and international organizations have a need for knowledge of how contemplated policy in (agricultural) production and market conditions can affect production, prices, income, and resource utilization in agriculture as well as in other industries. The same knowledge is relevant in consulting for the single firm by comparing with other firms, best practice, including the influence and importance of uncertainty in data and in results. Students, after having carried through the course, will have special qualifications to make a contribution to such knowledge. Knowledge of production economical facts is also of importance in economic consulting of farmers.

After completing the course the students should be able to:

o Describe the primal and dual approaches in microeconomic production theory, particularly production functions, cost minimization and cost functions, profit maximization and profit functions
o Describe procedures in econometric production analysis based on primal and dual approaches in microeconomic theory
o Describe approaches for efficiency analysis
o Describe how the assumptions of the various approaches influence the results

o Apply econometric production analysis and efficiency analysis using real data and real applications
o Interpret the results of econometric production analyses and efficiency analyses
o Choose a relevant approach for econometric production and efficiency analysis
o Evaluate approaches for econometric production and efficiency analysis

o Use econometric production analysis and efficiency analysis to analyse various real-world questions
o Critically evaluate the appropriateness of a specific econometric production analysis or efficiency analysis for analysing a specific real-world question
Course Literature
o Chambers, RG (1988): Applied Production Analysis -- A Dual Approach, Cambridge University Press.
o Material provided by the teacher.
Course Coordinator
Arne Henningsen, arne@foi.dk, Institute of Food and Resource Economics/Production and Technology Unit, Phone: 353-32274
Study Board
Study Committee NSN
Work Load
project work48