Agriculture Economics final Flashcards
(185 cards)
1
Q
What kind of economic system does the U.S. economy represent?
A
Mixed
2
Q
Scarce resources like land, labor, and capital can be categorized as
A. Natural and biological resources
B. Human
C. Manufactured
D. All of the above
A
D. All of the above
3
Q
What branch of economics is concerned with effects of nutrition labeling on the dietary quality of consumers (i.e., what-if types of questions)?
A. Normative economics
B. Microeconomics
C. Macroeconomics
D. Positive economcis
A
D. Positive economics
4
Q
Congress commissioned a study to determine what the poverty level or minimum level for subsistence should be for the U.S. population. What branch of economics does this represent?
A. Normative economics
B. Positive economics
C. Microeconomics
D. Macroeconomics
A
A. Normative economics
5
Q
What branch of economics is concerned with interest rates and the gross
domestic product (GDP) of the U.S. economy?
A. Normative economics
B. Positive economics
C. Microeconomics
D. Macroeconomics
A
D. Macroeconomics
6
Q
What branch of economics is concerned with the activities of U.S. agricultural producers? (As individuals)
A. Normative economics
B. Positive economics
C. Microeconomics
D. Macroeconomics
A
C. Microeconomics
7
Q
Most resources are best suited for a particular use. For example, climate and other conditions in Florida allow resources to be used in orange production in lieu of wheat or potato production. What economic concept deals with this issue?
A. Specialization
B. Fallacy of composition
C. Opportunity cost
D. None of the above
A
A. Specialization
8
Q
________ refers to the implicit cost associated with the next best alternative in a set of
choices available to decision-makers.
A. Opportunity cost
B. Resource scarcity
C. Specialization
D. None of the above
A
A. Opportunity Cost
9
Q
Recently, the price of gasoline dropped to just under $3.50/gallon. Economic analysts currently are focusing on questions concerning the likely impacts of this price decrease on the demand for gasoline. The branch of economics that deals with these questions is
A. Positive economics.
B. Normative economics.
C. MicroeconomicsD. Macroeconomics.
A
A. Positive economics
10
Q
Agricultural economics is an applied social science.
T of F
A
True
11
Q
The U.S. economy represents a purely capitalistic system.
T or F
A
False
12
Q
RJR Nabisco has three alternatives for manufacturing snack foods:
- Option 1: Manufacture cookies alone and obtain a profit of $30 million.
- Option 2: Manufacture chips alone and obtain a profit of $25 million.
- Option 3: Manufacture both cookies and chips and obtain a profit of $35 million.
Given the information above, the opportunity cost of this firm is $30 million.
T or F
A
True
13
Q
________: the concept that a finite quantity of resources are available to meet society’s needs.
A. Scarcity
B. Opportunity cost
C. Abundance
D. Normative
A
A. Scarcity
14
Q
List three distinct types of resources.
A
- Natural, biological resources
- Human resources
- Manufactured resources
15
Q
Concern is expressed on the part of the current administration about what should be the optimal tax rate for those households who make more than $250,000 per year. This issue corresponds to what branch of economics?
A
Normative economics
16
Q
The food and fiber industry today accounts for roughly what percent of GDP in the United States?
A
12 to 15 percent
17
Q
The value of any index for the base period is
A. 0
B. 1
C. -1
D. None of the above
A
B. 1
18
Q
The portion of food and expenditures associated with activities of firms beyond the farm gate is known as
A. Marketing bill
B. Value added
C. Consumer surplus
D. None of the above
A
A. Marketing bill
19
Q
The term “real” as opposed to “nominal” means that economists are making adjustments for
A. Resource scarcity
B. Opportunity cost
C. Inflation
D. None of the above
A
C. Inflation
20
Q
U.S. farms tend to be diversified rather than specialized.
T of F
A
False
21
Q
Which of the following statements is false?
A. Regardless of the commodity, the farmer always receives 20 cents of the dollar spent in food.
B. Agricultural economics is an applied social science.
C. The Latin phrase ceteris paribus means everything else the same or holding all other factors constant.
D. The rational consumer maximizes satisfaction subject to a budget constraint.
A
A. Regardless of the commodity, the farmer always receives 20 cents of the dollar spent in food.
22
Q
The marginal utility of a good (e.g., bananas) declines with increases in the consumption of that good. This phenomenon is referred to as the
A. Engel’s Law
B. Law of Diminishing Marginal Utility
C. Law of Demand
D. None of the above
A
B. Law of Diminishing Marginal Utility
23
Q
Which of the following statements is (are) true?
A. Indifference curves never intersect.
B. When total utility reaches a maximum, marginal utility is zero.
C. The marginal rate of substitution is always negative
D. All of the above
A
D. All of the above
24
Q
The budget line does not depend on
A. The preferences for the respective goods
B. Income
C. The prices of the goods in question
D. None of the above
A
A. The preference for the respective goods
25
We do not need to actually measure the level of satisfaction derived by a consumer from the consumption of goods. We only need a ranking among the alternative consumption bundles. Thus utility is a(n) ________ concept.
A. Mathematical
B. Cardinal
C. Ordinal
D. None of the above
C. Ordinal
26
The mathematical representation of the satisfaction a consumer derives from a bundle of goods is called the
A. Indifference curve
B. Engel curve
C. Demand curve
D. Utility function
D. Utility function
27
Indifference curves may intersect.
True or false
False
28
In order to construct the budget line, one only needs to know the prices of the goods in question.
True or false
False
29
________: the rate of exchange of pairs of consumption goods or services to leave utility or satisfaction unchanged.
Marginal rate of substitution
30
________: marginal utility declines as more of a good or service is consumed during a specified period of time.
Law of diminishing marginal utility
31
________: defined by the income available for consumption and the prices that a consumer faces
Budget constraint
32
________: decrease (increase) in price of a product means the consumer can afford to buy more (less) of the product.
Income effect
33
________: a graph of the locus of consumption bundles that provide a consumer a given level of satisfaction.
Indifference curve
34
________: as disposable income of a consumer increases, the percentage of income spent for food decreases if all other things remain constant.
Engel’s law
35
________: shift in the demand curve caused generally by changes in the prices of complements or substitutes, income, and tastes and preferences.
Change in demand
36
________: a mathematical or functional representation of the satisfaction a consumer derives from a consumption bundle.
Utility function
37
What is the simplest definition of economics?
A. Scarcity + choice
B. Scarcity + land
C. Resources + money
D. Currency + media
A. Scarcity + choice
38
To economists, the word marginal means
A. Change
B. Constant
C. Positive
D. Negative
A. Change
39
What economist was a champion of capitalism and referred to the “invisible hand of the market”?
A. Adam Smith
B. Thomas Piketty
C. Robert Flatness
D. Norm McDonald
A. Adam smith
40
Since World War II, there have been increases in productivity in the agricultural sector. This trend is due in part to:
A. All of the above
B. the substitution of capital and materials for labor
C. Increases in ag technology
D. Farm consolidation
A. All of the above
41
The major component of the marketing bill for food is ____.
A. Labor
B. Transportation
C. Advertising
D. Food
A. Labor
42
Changes in taste and preference refer to changes in
A. Composition of the population
B. Attitudes towards food safety
C. Attitudes towards nutrition and health
D. All of the above
D. All of the above
43
Which of the following is the best example of an inferior good?
A. Vintage french champagne
B. Kool-aid
C. Premium beer
D. Vintage california wine
B. Kool-aid
44
Suppose that a successful advertising and promotion campaign occurs for apples. Given this successful campaign, it is likely that:
A. The quantity of apples sold will rise and the price of apples will rise.
B. The quantity of apples sold will fall and the price of apples will rise.
C. The quantity of apples sold will fall and the price of apples will fall.
D. The quantity of apples sold will rise and the price of apples will fall.
A. The quantity of apples sold will rise and the price of apples will rise.
45
Normal goods are goods for which consumption falls (rises) when income increases (decreases).
True or false
False
46
The consumer is at equilibrium when the marginal rate of substitution is equal to the slope of the budget line.
True or false
True
47
________: the consumption bundle that maximizes total utility and is feasible as defined by the budget constraint.
A. Consumer equilibrium
B. Consumer demand
C. Price schedule
D. Maximization schedule
A. Consumer equilibrium
48
________: the schedule that shows how many units of a good that the consumer will purchase at different income levels, all other factors constant.
A. Engel curve
B. Supply
C. Demand
D. Budget constraint
A. Engel curve
49
________: goods for which consumption falls when income increases.
A. Inferior good
B. Normal good
C. Engel good
D. Unitary good
A. Inferior good
50
________: substitution of a product for another because the price of the former has declined or increased.
A. Substitution effect
B. Budget effect
C. Quantitive effect
D. Inferior effect
A. Substitution effect
51
Suppose that the own-price elasticity for yogurt is -0.6. Which of the following statement(s) is (are) true?
A. Raise the price of yogurt in order to increase revenue in the short-run.
B. Lower the price of yogurt in order to increase revenue in the short-run.
C. The own-price elasticity of Dannon Yogurt is likely larger than -0.6 (in absolute value).
D. Both a and c
D. Both a and c
52
Which of the following combinations of goods is in line with a cross-price elasticity equal to zero?
A. Pancakes and maple syrup
B. Kentucky fried chicken and dove deodorant
C. Pepsi and Dr. Pepper
D. None of the above
B. Kentucky fried chicken and Dove deodorant
53
Which of the following statement(s) is (are) true?
A. If the cross-price elasticity of demand between two goods is negative, then the two good are complements.
B. If the income elasticity of demand for a product is greater than 1, then the good is labeled a necessity.
C. If the income elasticity of demand for a product is negative, then the good is labeled an inferior good.
D. Both a and c
D. Both a and c
54
Which of the following statement(s) is (are) true?
A. An income elasticity of less than 1 indicates that the commodity is a necessity.
B. A positively sloped Engel curve implies that the commodity is a normal good.
C. If the own-price elasticity of demand is -1, the demand is said to be unitary elastic.
D. All of the above
D. All of the above
55
If the own-price elasticity of demand is -1.25, in order for the manufacturer of Ragu to increase total revenue, at least in the short run, it would be advisable to
A. Do nothing
B. Lower the price of Ragu
C. Raise the price of Ragu
D. Cant tell; insufficient informstion
B. Lower the price of Ragu
56
Which of the following is not true?
A. The own-price elasticity is always negative
B. The share of total farm receipts earned by the largest farms has been increasing during the past two decades.
C. Productivity in the farm sector has increased dramatically over the past 50 years.
D. None of the above (that is, all statements are true).
D. None of the above (that is, all statements are true).
57
Which of the following is true?
A. The law of diminishing marginal utility states that utility declines as more of a good is consumed.
B. If the income elasticity of demand f is greater than 0, then the good is labeled as inferior.
C. The law of demand states that as the price of a commodity rises, the changes in consumer surplus is negative.
D. If the cross-price elasticity of demand between two goods is negative, then the two goods are complements.
D. If the cross-price elasticity of demand between two goods is negative, then the two goods are complements.
58
The stage of production where the total physical product curve begins to decline corresponds to
A. Stage 3
B. App <0
C. Mpp < 0
D. Both b and c
A. Stage 3
59
Which of the following is true?
A. If total economic surplus is positive due to a shift in a demand or supply curve, society is better off
B. AFC + AVC = ATC
C. The law of diminishing marginal returns states that as the use of an input increases, its MPP will eventually fall
D. All of the above
D. All of the above
60
The marginal physical product of labor is
A. The amount of extra output that is produced when one extra worker is added and other factors of production are held constant.
B. The output which labor could produce without other factors of production.
C. The additional revenue received by the firm by selling the out of one additional worker.
D. The amount of extra output that is produced when one worker is added and other factors of production are increased proportionally.
A. The amount of extra output that is produced when one extra worker is added and other factors of production are held constant.
61
Which of the following would provide the best evidence that a commodity is being produced under conditions of perfect competition?
A. The demand curve facing any one producer is perfectly elastic.
B. The supply curve is perfectly inelastic.
C. The profits of producers are low.
D. The production of the commodity is large.
B. The supply curve is perfectly inelastic.
62
The marginal value product for labor is equal to the marginal physical product for labor times the product price.
True or false
True
63
Average variable costs is equal to the firm's total variable costs divided by its total output.
True or false
True
64
An example of average physical product in agriculture is the yield or number of bushels of corn produced per acre.
True or False
True
65
A profit-maximizing firm will use an input up to the point where the cost of the input equals the marginal revenue received by the firm.
True or false
False
66
Marginal cost is the additional cost created by the next, or marginal unit of the variable input
True or false
True
67
The point of tangency between the iso-cost and the isoquant indicates
A. The minimum cost of using these two inputs for a given level of output.
B. How much profit a firm can make using these two inputs.
C. How much of two inputs a firm should use.
D. None of the above
A. The minimum cost of using these two inputs for a given level of output.
68
The marginal rate of technical substitution is equal to
A. The ratio of the level of capital to the level of labor
B. The ratio of the change in capital to the change in labor.
C. The ratio of the change in output to the ratio of two input prices.
D. The ratio of the change in capital to the marginal physical product of capital.
B. The ratio of the change in capital to the change in labor
69
The doubling of a firm's feedlot capacity which results in a doubling of production is characteristic of
A. Constant returns to scale
B. A shift in the iso-revenue line
C. A shift in the iso-cost line
D. Increasing returns to scale
A. Constant returns to scale
70
The slope of an iso-revenue line is determined by
A. The ratio of the product to the level of output
B. The ratio of output to the price of the product
C. The ratio of the price of the two products.
D. None of the above
C. The ratio of the price of the two products.
71
Increasing returns to size can be:
A. Seen as the long run average cost curve turns up.
B. Ensures that it is profitable to expand irrespective of product price.
C. Observed as the firm approaches the inelastic portion of its marginal cost curve.
D. None of the above
D. None of the above
72
The profit maximizing combination of two products to produce is found
A. Where the iso-revenue line is tangent to the production possibilities curve.
B. Where the percentage change in the prices of the two products is equal.
C. Where the marginal physical products of the two products is equal.
D. Where the iso-revenue line intersects the production possibilities curve.
A. Where the iso-revenue line is tangent to the production possibilities curve.
73
The production possibilities curve in the current period
A. Reflects only the most efficient combinations of two products to generate revenue.
B. Reflects only the most efficient combination of two inputs to generate revenue.
C. Reflects all of the combinations of two products to generate revenue.
D. None of the above
A. Reflects only the most efficient combinations of two products to generate revenue.
74
The iso-revenue curve will shift to the right
A. If the production possibilities curve expands.
B. If the price of the two commodities increases
C. If the level of income increases.
D. None of the above
C. If the level of income increases
75
The long run average cost curve
A. Is an envelope of a series of short run average cost curves.
B. Is an envelope of a series of marginal cost curves.
C. Reflects increasing, constant and decreasing returns to labor.
D. None of the above
A. Is an envelope of a series of short run average cost curves.
76
Net income represents the accountant's version of after-tax profits.
True or false
True
77
The long run average cost curve is also known as the planning curve.
True or False
True
78
The long run equilibrium of the firm under conditions of perfect competition will occur at that output level where the product price is equal to both the firm's marginal and average total costs.
True or False
True
79
An isoquant reflects the combination of products that minimizes the cost of production.
True or false
False
80
The tangency between and iso-cost line and an isoquant represents the least cost combination of two inputs.
True or false
True
81
The iso-revenue line reflects the rate at which the market is willing to substitute between two products as their prices change.
True or false
True
82
The production possibilities curve reflects the different products the business can produce given efficient use of its existing resources.
True or false
True
83
The slope of the production possibilities curve is called the marginal rate of technical substitution.
True or false
False
84
The slope of an isoquant is called the marginal rate of product transformation.
True or false
True
85
The shape of the long run average cost curve is typically U-shaped in practice.
True or false
False
86
The break-even level out output occurs for a business when
A. Average revenue equals marginal revenue.
B. Marginal revenue equals average total cost.
C. Marginal cost equals marginal revenue.
D. Average revenue equals average variable cost
B. Marginal revenue equals average total cost
87
The firm's supply curve in the short run is given by
A. The segment of the marginal cost curve above average variable cost.
B. The segment of the marginal cost curve above average total cost.
C. The segment of the marginal cost curve above the break-even price.
D. None of the above.
a. The segment of the marginal cost curve above average variable cost.
88
The market supply curve can be found by
A. Looking at the quantity supplied in the previous period.
B. Adding the quantities the firms could supply at a break-even price.
C. Adding the supply response for all firms for a given set of prices.
D. None of the above.
C. Adding the supply response for all firms for a given set of prices.
89
An increase in demand involves
a. Movement along the demand curve.
b. A shift in the supply curve to the right.
c. A shift in the demand curve to the left.
d. None of the above.
d. none of the above
90
An increase in supply involves
a. Movement along the supply curve.
b. A shift in the demand curve to the right.
c. A shift in the supply curve to the right.
d. None of the above.
c. A shift in the supply curve to the right.
91
Total economic surplus is represented by
a. the area above the supply curve and below the market equilibrium price.
b. The area below the demand curve and above the supply curve.
c. The area below the demand curve and above the market equilibrium price.
d. None of the above.
b. The area below the demand curve and above the supply curve.
92
The occurrence of drought conditions in the corn market will
a. Result in a deadweight loss to society.
b. Increase the price of corn.
c. Lower consumer surplus.
d. All of the above.
d. All of the above.
93
Firm's under conditions of perfect competition will
a. Will face barriers to entry.
b. Have no disproportionate influence on price.
c. Will face a few other competitors in the market.
d. none of the above
b. Have no disproportionate influence on price.
94
The production possibilities frontier represents the technically efficient combination of two products a business can produce in the current period given its existing resources and technology.
true or false
true
95
The price of the product and marginal revenue are identical under conditions of perfect competition.
true or false
true
96
The marginal rate of product transformation represents the slope of the production possibilities frontier.
true or false
true
97
The elasticity of supply is equal to the percent change in price for a given percent change in quantity.
true or false
false
98
The market supply curve under conditions of perfect competition is typically perfectly elastic.
true or false
false
99
An increase in supply will increase the quantity demanded.
true or false
true
100
A bumper corn crop will increase both producer and consumer surplus.
true or false
true
101
A market shortage occurs in a market when the quantity supplied at a given price exceeds the quantity demanded.
true or false
false
102
A market surplus occurs in a market when the quantity supplied at a given price is greater than the quantity demanded.
true or false
true
103
Which form of imperfect competition is associated with the airline industry?
a. monopoly
b. oligopoly
c. monopolistic competition
d. none of the above
b. Oligopoly
104
Federal marketing orders were created in 1937 by way of which legislative act?
a. Robinson-Putman Act
b. Capper-Volstead Act
c. Cooperative Marketing Act
d. Agricultural Marketing Agreement Act
d. Agricultural Marketing Agreement Act
105
The economic analysis of imperfect competition was originated by
a. Joan Robinson.
b. Edward Chamberlain.
c. both a and b
d. none of the above
c. both a and b
106
A firm's supply curve corresponds to
a. the marginal cost curve.
b. the average total cost curve.
c. the marginal cost curve above the minimum average variable cost curve.
d. the average variable cost curve.
c. the marginal cost curve above the minimum average variable cost curve.
107
In an oligopoly
a. firms will attempt to differentiate their products.
b. the market demand curve is kinked.
c. firms will match all price decreases of another but will not match price increases.
d. all of the above
d. all of the above
108
Which of the following are common barriers to entry?
a. economies of scale
b. absolute unit-cost advantages
c. capital access and costs
d. all of the above
d. all of the above
109
Which of the following is not characteristic of imperfect competition?
a. homogeneous products
b. few buyers and sellers
c. barriers to entry
d. Both A and C
a. homogeneous products
110
The Packers and Stockyards Act of 1921
a. established the Packers and Stockyards Administration, still exists today.
b. reinforced antitrust laws regarding livestock marketing.
c. was the principal legislation exempting cooperatives from antitrust laws.
d. Both A and C
b. reinforced antitrust laws regarding livestock marketing.
111
The arrangement among producers and processors of agricultural commodities in which the chief goal is to improve income is called
a. nonprice competition.
b. collusion.
c. a monopsony.
d. a marketing order.
d. a marketing order.
112
If the government were to impose a lump-sum tax on a monopolist, what is likely to happen to the quantity produced of a commodity and the price charged relative to the situation where there is no lump-sum tax imposed?
a. The price would fall but the quantity produced would rise
b. The price would fall and the quantity produced would fall
c. No change in price or quantity produced, only a reduction in profit
d. No change in price, quantity produced, or profit would occur.
c. No change in price or quantity produced, only a reduction in profit
113
The Capper-Volstead Act of 1922
a. reinforced antitrust laws regarding livestock marketing.
b. plugged loopholes in the Sherman Antitrust Act of 1890
c. was the principal legislation exempting cooperatives from antitrust laws.
d. all of the above
c. was the principal legislation exempting cooperatives from antitrust laws.
114
Farmers historically have organized agricultural bargaining groups called
a. unions
b. cartels
c. partnerships.
d. cooperatives
d. cooperatives
115
The social costs of imperfect competition are known as
a. consumer surplus.
b. dead-weight loss.
c. producer surplus.
d. none of the above.
b. dead-weight loss.
116
Which of the following is true about oligopoly?
a. There are many sellers
b. There is no ability to set price
c. There are few buyers
d. none of the above
d. none of the above
117
When firms cannot alter the price they face in the market, they are said to be price takers.
true or false
true
118
An outward shift in the demand curve in a perfectly competitive market will result in an increase in supply and make the demand curve more inelastic.
true or false
false
119
Non-price competition refers to actions that attempt to increase the demand for a product or service via product differentiation.
true or false
true
120
Barriers to entry are more likely to be stronger under monopolistic competition than under an oligopoly.
true or false
false
121
The U.S food and fiber system is one of the least regulated industries in the economy.
true or false
false
122
Which of the following statements is a correct summary of the relationship between the agricultural sector and air pollution?
a. Agriculture is a leading cause of many air pollutants, but is not affected by air pollution problems.
b. Agriculture is neither a source of any air pollutants, nor is it directly affected by air pollution problems
c. Agriculture is a cause of some air pollutants, but is also affected by some air pollution problems.
d. Agriculture has no direct effect on air pollution, but is affected by air pollution problems.
c. Agriculture is a cause of some air pollutants, but is also affected by some air pollution problems.
123
Which of the following are not important areas of remaining scientific uncertainty regarding global climate change?
a. Whether or not the planet has warmed on average.
b. Whether or not agriculture in the United States will be adversely affected by climate change.
c. Whether or not concentrations of carbon dioxide have increased in the atmosphere.
d. Whether or not greenhouse gases trap heat in the atmosphere.
a. Whether or not the planet has warmed on average.
124
Which of the following is not one of the three critical characteristics of efficient property rights?
a. Enforceability
b. Exclusivity
c. Transferability
d. Externality
d. Externality
125
Which of the following statements best captures the intuitive reason behind discounting?
a. Since dollars today can be invested, to obtain $1 in the future we have to give up less than $1 today. Hence future benefits and costs are given more weight than benefits and costs today.
b. Since incomes rise over time, discounting means that we place less weight on benefits and costs today and more weight on benefits in the future.
c. Since dollars today can be invested, yielding a positive return, discounting places more weight on future returns.
d. Since investments yield a return, we have to give up less than $1 today to obtain $1 in future benefits. Hence we place less weight on future benefits and costs than we would on benefits and costs that dollars occur today.
126
The Conservation Reserve Program pays farmers to take land out of production. The primary focus of the program is on
a. maintaining water quality.
b. reducing erosion.
c. improving rural landscapes by creating more forested land.
d. improving habitat for endangered species.
b. reducing erosion.
127
Which of the following activities could be prohibited by the Endangered Species Act?
a. Building a fence that would impact the breeding ground of an endangered rodent.
b. The hunting of a federally listed endangered bird.
c. Draining water from a pond where an endangered plant lives.
d. all of the above
d. all of the above
128
The Clean Water Act, originally passed in 1972, was successful in achieving its stated goal of eliminating the release of "toxics in toxic amounts" by 1985.
true or false
false
129
The quality of water in the nation's rivers and streams has improved so much that by 2016 nearly 100% of that nation's rivers and streams had a biological condition of good.
true or false
false
130
The greenhouse effect refers to the physical phenomenon in which certain gases accumulate in the atmosphere and tend to warm the planet because they reflect solar radiation back to the planet. Since CO2 concentrations have increased from 250 parts per million in 1900 to almost 405 by 2016, the greenhouse effect has increased.
True or false
true
131
Externalities always arise because of a failure of transferability.
true or false
false
132
The prior appropriation doctrine is a system in which individuals have rights to specific quantities of water and these right can be sold to others.
true or false
true
133
If groundwater resources are regulated by the "rule of capture," whoever can pump up the water can take as much as they desire. This approach leads to an economically inefficient use of groundwater.
true or false
true
134
What is the primary motivation for producers?
a. profit
b. production
c. activism
d. Philantropy
a. profit
135
What is the profit-maximizing level of production? In other words, how do producers know how much to produce?
a. Where marginal cost equals marginal revenue
b. Where marginal cost equals total revenue
c. Where marginal revenue equals average cost
d. Where iso-utility intersects average cost
a. Where marginal cost equals marginal revenue
136
Which of the following is true regarding a market that is in perfect competition?
a. For producers, average revenue equals marginal revenue
b. Producers can set their own price
c. Prices are determined by government
d. The market is inefficient, always resulting in deadweight loss
a. For producers, average revenue equals marginal revenue
137
Which of the following is NOT a perfectly competitive market?
a. Airplane manufacturing
b. Crude oil production
c. Corn production
d. Lumber harvesting
a. Airplane manufacturing
138
Which of the following is a fixed cost?
a. Combine
b. Diesel
c. corn seed
d. labor
a. Combine
139
What is the best definition of variable costs?
a. A cost that changes based on level of production
b. A cost that changes based on level of profit
c. A cost that does not change based on level of production
d. A cost that changes based on government intervention
a. A cost that changes based on level of production
140
What is the best definition of marginal cost?
a. The cost incurred for one additional unit of production
b. The average cost incurred for each unit of production
c. The total cost incurred from inputs divided by total output
d. The ratio of cost to revenue
a. The cost incurred for one additional unit of production
141
How is profit calculated?
a. Total revenue - total cost
b. Total revenue / total cost
c. Total cost / total revenue
d. Total revenue + labor costs
a. Total revenue - total cost
142
Under perfect competition, how can a farmer increase profit?
a. Decrease cost of production
b. Increase price
c. Use more inputs
d. Decrease use of inputs
a. Decrease cost of production
143
Under perfect competition, when the market price decreases, who will be the first producer to exit the market?
a. Firm with highest ATC
b. Firm with lowest ATC
c. Firm with highest AR
d. Firm with lowest AFC
a. Firm with highest ATC
144
Where can you find producer surplus in a partial equilibrium model? (Supply/demand chart)
a. Above supply curve, below price
b. Above demand curve, below ATC
c. Above supply curve, below demand
d. Below supply curve, left of quantity
a. Above supply curve, below price
145
Which of these is NOT a barrier to entry in a market?
a. Time
b. Economies of scale
c. capital funding access
d. Preferential government policies
a. Time
146
Which of the following explains a monopsony market?
a. One buyer, many sellers
b. One seller, many buyers
c. Many sellers, many buyers
d. Few buyers, few sellers
a. One buyer, many sellers
147
Which legislative action closed loopholes in the Sherman act regarding anti competitive behavior?
a.Clayton Act
b. Capper-Volstead Act
c. Flatness Act
d. Agriculture Marketing Agreement
a.Clayton Act
148
Where should a price floor be set in order to be effective?
a. above market equilibrium
b. Below market equilibrium
c. At market equilibrium
d. Price floors cannot be effective
a. above market equilibrium
149
Which of the following would likely NOT result in a deadweight loss to the market?
a. Price of corn increasing due to drought
b. Government implementing carbon tax
c. Government setting price controls (floors, ceilings)
d. Creation of monopoly/monopsony due to regulation
a. Price of corn increasing due to drought
150
Which of these is the primary legislative action that guides US water quality standards?
a. Clean Water Act
b. capper-Volstead Act
c. Flatness Act
d. Clean Water Brief of 1883
a. Clean Water Act
151
What is the most prominent pollutant in lakes in the US?
a. Excess nutrients
b. Pesticides
c. Metals
d. PCB's
a. Excess nutrients
152
What is the leading cause of water pollution in the US?
a. Agriculture fertilizer
b. Oil spills
c. Coal fired power plants
d. Gas stoves
a. Agriculture fertilizer
153
A record crop can lead to
a. Sharp declines in cash receipts from sale of production and higher input prices taxes.
b. Sharp declines in farm product prices and cash receipts from sale of production.
c. Sharp declines in input use and cash receipts from sale of production.
d. none of the above
b. Sharp declines in farm product prices and cash receipts from sale of production.
154
Commodities covered by federal government programs include
a. hay
b. pork
c. rice
d. none of the above
c. rice
155
Export demand for commodities is affected by
a. A stronger U.S. dollar.
b. Contractionary monetary policy which leads to higher U.S. interest rates relative to importing countries.
c. Expansionary fiscal policy which leads to higher U.S. interest rates relative to importing countries.
d. All of the above.
All of the above.
156
Thomas Malthus argued that
a. Population growth would exceed the growth in the food supply.
b. Production grows at a geometric rate.
c. Population grows at an arithmetic rate.
d. None of the above.
a. Population growth would exceed the growth in the food supply.
157
The U.S. food and fiber industry
a. Is one of the nation's most regulated sectors of the economy.
b. Benefits from expansionary monetary policies.
c. Includes farm input supply firms.
d. all of the above
All of the above.
158
Foreign trade enhancements include
a. Reducing tariffs on food imports.
b. Increasing the value of the dollar.
c. Instituting quotas on food imports.
d. None of the above.
a. Reducing tariffs on food imports.
159
Forms of historical government intervention in agriculture includes
a. Foreign trade enhancements.
b. Adjusting production to market demand.
c. Price and income support payments.
d. All of the above.
d. All of the above.
160
A major feature of farm legislation beginning in 2015 includes
a. Crop insurance.
b. Set aside requirements to receive farm program benefits.
c. Deficiency payments.
d. None of the above.
a. Crop insurance.
161
The rationale for the government intervening in the U.S. farm sector includes supporting/protecting an infant industry.
true or false
false
162
The farm sector is one of the most highly capitalized sectors per worker in the U.S. economy.
true or false
true
163
The U.S. is highly sensitive to increasing interest rates.
true or false
true
164
The U.S. farm sector is characterized by a large number of large, highly capitalized farming operations.
true or false
true
165
A major change in farm program policy forthcoming in the 2014 farm bill involves greater reliance on property insurance as a means of providing a safety net to farmers.
true or false
false
166
Disposable income reflects
a. Net income from business activity.
b. Personal income after taxes.
c. Income before taxes.
d. none of the above
b. Personal income after taxes.
167
Consumption expenditures consists of
a. Purchases of food.
b. Purchases of airline tickets.
c. Purchases of automobiles.
d. All of the above.
d. All of the above.
168
investment expenditures consists of
a. Construction of office buildings.
b. Construction of new roads and bridges.
c. purchase of farmland
d. all of the above
a. Construction of office buildings.
169
The marginal propensity to save is equal to
a. The change in savings with respect to the change in change in consumption.
b. One plus the marginal propensity to consume.
c. One minus the marginal propensity to consume.
d. None of the above.
c. One minus the marginal propensity to consume.
170
The economy's aggregate supply curve reflects
a. A Keynesian or depression range.
b. a classic range
c. a normal range
d. all of the above
d. all of the above
171
Aggregate demand in the economy is equal to
a. consumption, investment and net exports.
b. Consumption, investment and government spending.
c. Full employment output.
d. None of the above.
d. None of the above.
172
A recessionary gap occurs in the economy when
a. Aggregate demand is less than potential GDP.
b. Aggregate demand is less than full employment output.
c. Aggregate demand is in the depression or Keynesian range of the aggregate supply curve.
d. none of the above
b. Aggregate demand is less than full employment output.
173
A inflationary gap occurs in the economy when
a. Aggregate demand is greater than full employment output.
b. Aggregate demand is greater than potential GDP.
c. Aggregate demand is perfectly elastic.
d. None of the above.
a. Aggregate demand is greater than full employment output.
174
A barter economy occurs where
a. Businesses provide services to households in exchange for goods and services.
b. Excludes financial markets.
c. Households pay for services provided by labor with goods and services.
d. All of the above.
d. All of the above.
175
Given the equation C = $1,500 + .70($3,000),
a. Autonomous consumption is $1,500.
b. Marginal propensity to save is .70.
c. Consumption is equal to $3,000.
d. All of the above.
d. All of the above.
176
YFE represents the level of potential GDP in the economy.
true or false
false
177
Real GDP is equal to nominal GDP adjusted for productivity.
true or false
false
178
The marginal propensity to consume is equal to the percent change in consumption with respect to a change in income.
True or false
true
179
The level of saving in the economy is equal to the level of income times the marginal propensity to consume.
True or false
false
180
Partial equilibrium refers to the equilibrium level of GDP in the economy.
true or false
false
181
National income is equal to wages, rents, interest and profits.
True or false
true
182
A complete circular flow of the economy includes both the government sector and the financial markets.
True or false
TRUE
183
Net exports of goods and services is equal to imports minus exports.
true or false
false
184
If personal income is equal to $3,000 and consumers spend $3,600, the level of savings in the economy would $600.
true or false
false
185
The slope of the investment function for the economy is called the marginal interest sensitivity of investment.
True or false
true
