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Flashcards in Chapter 2 Deck (36)
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1

Define asset

something of value owned by a farm or a ranch. Generally divided into either physical and financial assets or current (short term) and fixed (intermediate and long term) assets

2

Define balance sheet

a financial statement reporting the value of real estate, non-real estate, and financial assets owned by farms and ranches and also outstanding debt

3

Define capital

physical assets

4

Define concentration

refers to the number and market power of firms marketing their products in a particular market. A market with a small number of firms accounting for the majority of total sales is said to have a high degree of concentration

5

Define equity

also referred to as net worth, represents the owners share of the business. Equity is found by subtracting total liabilities from total assets

6

Define farm sector

sector of the economy comprised of farms and ranches producing raw agricultural products. Often referred to as the farm business sector

7

Define financial structure

refers to the right-hand side of the balance sheet or the amount of debt the business has relative to the amount of equity the owner has invested in the company

8

Define food and fiber industry

consists of business entities that are involved in one way or another with the supply of food and fiber products to consumers

9

define gross domestic product

(GDP) referred to as the nation's output. Equal to consumer expenditures, business investment, government spending, and net exports

10

define gross farm income

annual level of income received from farming activities before farm expenses, taxes, and withdrawals have been deducted

11

define inflation-adjusted

refers to the nominal dollar value that has been converted to a real dollar value using a price deflator like the consumer price index or CPI

12

define labor

one of four general classes of inputs captured in a production function. Includes hired and unpaid family labor but excludes management.

13

define land

one of four general classes of inputs captured in a production function. Refers to the soil and other attributes of land used to produce a raw agricultural product

14

define marketing bill

the value of food expenditures contributed by firms beyond the farm gate

15

define materials

the various inputs used to produce a good or provide a service

16

define mergers

the combination of two or more firms into one

17

define net farm income

gross farm income minus farm expenses and taxes

18

define nominal dollar values

the current price or value of a good, service or asset. Nominal values refer to economic measures for which no adjustments to inflation have been made

19

define output index

an index that shows the level of current production or output of a particular commodity or group of commodities relative to a particular year, or base period

20

define price index

an index that shows the level of current price of a particular commodity or group of commodities relative to a particular year or base period

21

define productivity

level of output per unit of input. Crop yield per acre is a measure of productivity

22

define profitability

returns on capital invested in farm assets represent a measure of profitability. May be expressed in dollar terms or in percentage terms

23

define real dollar values

refers to the current price or value of a good, service, or asset adjusted for inflation

24

The percentage of disposable income currently spent on food in the U.S. is about _____.

10%

25

Bill Toney, a hobby farmer from Virginia, has a net worth of $16 million. He has assets of $30 million and liabilities of $ ____ million.

(assets - liabilities = net worth) liabilities = $14 million

26

The portion of food expenditures associated with the activities of firms beyond the farm gate is known as the ______.

marketing bill

27

Suppose that the index of prices received by the farmers for 2011 was 0.97 and the base year of this index was 2000, what can we conclude?

relative to 2000, farm prices were 3% lower in 2011.

28

Since WWII, there have been increases in productivity in the agricultural sector. This trend is due in part to:

a. the substitution of capital for labor
b. increases in farm size
c. the decline in numbers of farms

29

What are the 5 sectors of the food and fiber industry?

1. farm input supply sector
2. farm sector
3. processing and manufacturing sector
4. wholesale and retail sector
5. consumers

30

The major component of the marketing bill for food is ______.

Labor