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Derivation of economic weights from profit equations

Published online by Cambridge University Press:  02 September 2010

E. W. Brascamp ,
C. Smith  and
D. R. Guy
E. W. Brascamp
Affiliation:
Institute of Animal Genetics, University of Edinburgh, West Mains Road, Edinburgh EH9 3JN
C. Smith
Affiliation:
AFRC Animal Breeding Research Organisation, West Mains Road, Edinburgh EH9 3JQ
D. R. Guy
Affiliation:
Meat and Livestock Commission, PO Box 44, Queensway House, Bletchley, Milton Keynes MK2 2EF
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Abstract

The economic weights derived from profit equations depend on the base used for the evaluation. Thus different relative economic weights are obtained per unit of investment, per breeding female, per individual or per unit of product. This has led to uncertainty and confusion about appropriate economic weights in livestock improvement, and to apparent differences in interests between the investor, the farmer and the consumer. It is shown here that if the profit equation has a zero outcome, or the profit equation is transformed by setting its outcome to zero by considering profit as a cost of production (so called ‘normal profit’ in economics), then the relative economic weights are the same for all bases of evaluation. It is argued that this is the appropriate basis to determine economic weights.

Type
Research Article
Information
Animal Production , Volume 40 , Issue 1 , February 1985 , pp. 175 - 179
Copyright
Copyright © British Society of Animal Science 1985

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References

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