The Beef Cow-Calf Enterprise in the Georgia Piedmont: A Case Study in Conspicuous Production

Economists have demonstrated considerable concern with the appropriateness of profit maximization as a sole firm objective. Agricultural economists have adopted suggestions of economic theorists in writings on production economics; for example, Heady relaxed the objective of profit maximization to incorporate preferences for family consumption and risk aversion. Production economics research has supported the theoretical reasoning for multiple firm objectives; in a recent article, Lin, Dean, and Moore state “… empirical studies explicitly employing the profit maximization hypothesis … have generally provided results inconsistent with observed or plausible behavior”. Previous studies incorporating multiple objectives in analysis of agricultural production have largely been concerned with the general theoretical categories suggested by Heady. Lin, Dean, and Moore considered profit maximization and risk aversion. Patrick and Eisgruber considered accumulation of net worth, annual net income for consumption, leisure, and risk-taking; Hatch, Harmon, and Eidman included eight similar goals in their analysis. These studies have followed the tradition in micro-economic theory of separate production and consumption decision-making. While previous analyses have departed from the perfect knowledge, static basis of conventional micro-economics, the major interaction between production and consumption decisions concerns the level and variability of income available for consumption.