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Agroeconomics > PEQs > Flashcards

PEQs Flashcards

1
Q

Which will cause a movement along the demand curve for good X?

A

A change in the price of good X

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2
Q

Consider the market for chicken. An increase of the price of beef will…

A

Increase the demand of chicken

  • Higher price of chicken
  • Higher chicken purchases
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3
Q

On a production possibilities curve, a change from economic inefficiency to economic efficiency is obtained by…

A

Movement from one point inside the curve to a point on the curve

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4
Q

A public good may be defined as any good or service that…

A

Must be distributed to all citizens in equal shares

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5
Q

If an increase in bus fares in London reduces the total revenue of the public transit system, this is evidence that demand is…

A

Elastic

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6
Q

If a 5% reduction in the price of a good produces 3% increase in quantity demanded, the price elasticity of demand over this range of the demand curve is…

A

Inelastic

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7
Q

The income elasticity of demand for grapes is estimated to be 1.50.

We can conclude that grapes are…

A

A normal good

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8
Q

The change in quantity demanded resulting from a change in purchasing power is known as the…

A

Income effect

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9
Q
  • Suppose a milking parlour has 2 milking stalls and 2 workers.
  • It is able to milk 100 cows each day.
  • When it adds a third stall with no extra workers, it is able to milk 150 cows per day.
  • The marginal product of the third milking stall is…
A

50 cows per day

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10
Q

If both the marginal cost and average variable cost curves are U-shaped, at the point of minimum average variable cost, the marginal cost must be…

A

Equal to the average variable cost

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11
Q

Implicit costs are the opportunity costs of using the resources of…

A

Owners

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12
Q

Explicit costs are payments to…

A

Non-owners of a firm

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13
Q

Which statement is true for global milk consumption in the last 5 years?

A

Slightly increasing

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14
Q

Which asset has the highest average value on a dairy farm?

A

Livestock

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15
Q

Which asset has the lowest average value in a dairy farm?

A

Fodder reserve

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16
Q

Which of the large beef producer regions is not free of FMD?

A
  • EU
  • South-America
  • Asia
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17
Q

Which country is the top beef producer in the EU?

A

France

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18
Q

Which cost has the largest share in the total cost for broilers?

A

Feed

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19
Q

When does scarcity exist?

A

When people consume beyond their needs

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20
Q

Economics is the study of…

A

People making choices

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21
Q

Ceteris paribus means…

A

Other relevant factors like consumer incomes must be held constant

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22
Q

Give an example of a pair of factors exhibiting a direct relationship

A
  • The price of gasoline
  • Amount of gasoline purchased
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23
Q

Opportunity cost is the cost…

A

Best option given as a result of choosing an alternative

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24
Q

Milk equivilant

A

The amount of milk used for producing a specific dairy product

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25
Q

Elements of EU market regulations

A
  • Internal market regulation
  • Direct producer subsides
  • Foreign trade regulations
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26
Q

Hungarian export of liquid milk to…

A
  • Italy
  • Romania
  • Slovenia
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27
Q

Hungarian import of milk products from…

A
  • Germany
  • Poland
  • Slovakia
  • Czech republic
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28
Q

Largest hen egg producer

A

China

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29
Q

Which EU country has the highest fishery & aquaculture product per capita consumption?

A

Spain

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30
Q

How many EU member states are there?

A

28

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31
Q

What is a business cycle?

A

Alternating periods of economic growth and contraction

Can be measured by changes in GDP

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32
Q

What are the 4 phases of a business cycle?

A
  1. Peak
  2. Recession
  3. Trough
  4. Recovery
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33
Q

Causes of the business cycle

A

Changes in the forces of supply + demand

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34
Q

What is a peak?

A

Phase of the business cycle during which real GDP reaches its maximum after rising during a recovery

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35
Q

Recession

A
  • The downturn in the business cycle
  • GDP declines
  • Contraction
  • Defined as at least 2 quarters of GDP decline
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36
Q

What is a trough?

A
  • Business cycle phase where GDP reaches the minimum
  • After a recession
  • Turning point between recession and recovery
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37
Q

What is recovery?

A
  • Upturn in the business cycle during which GDP rises
  • Expansion
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38
Q

When is downturn considered a depression?

A

Depression - Historical reference to extreme deep and long recession

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39
Q

Economic growth

A

Expansion in national output measured by the annual percentage increase in a nations GDP

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40
Q

Why is economic growth an economic goal of a country?

A
  • Increases standard of living
  • Creates a bigger ‘economic pie’
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41
Q

Three types of economic indicators

A
  • Leading
  • Coincident
  • Lagging
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42
Q

What are the leading indicators?

A

Variables that change before real GDP changes

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43
Q

Coincident indicator

A

Variable changing at the same time as GDP

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44
Q

Lagging indicator

A

Variable changing after GDP changes

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45
Q

Cause of unemployment

A
  • Total spending falls
  • Business finds it profitable to produce a lower volume of goods and avoid unsold inventory
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46
Q

Unemployment rate

A

% of people who are seeking jobs

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47
Q

Civilian labour force

A
  • People 18+ who are employed/unemployed
  • Not including armed forces, home makers
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48
Q

Discouraged worker

A

Someone who wants to work but has stopped searching

They think there will be no job offers

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49
Q

Underemployment

A

People working at jobs below their level of skills

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50
Q

Criticisms of the unemployment rate

A
  • Does not include discouraged workers
  • Does not measure underemployment
  • Includes part-time workers
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51
Q

Give the types of unemployment

A
  • Seasonal
  • Frictional
  • Structural
  • Cyclical
52
Q

Seasonal unemployment

A

Caused by recurring changes in hiring due to changes in weather conditions

53
Q

Frictional unemployment

A

Unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, entering or re-entering the labour force

54
Q

Structural unemployment

A

Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities

55
Q

Cyclical unemployment

A

Caused by the lack of jobs during a recession

Results from insufficient aggregate demand

56
Q

Full employment

A

Unemployment =

Sum of:

  • Seasonal unemployment
  • Frictional unemployment
  • Structural unemployment
57
Q

What % of unemployment is considered full employment?

A

5%

58
Q

GDP gap

A

Difference between:

  • Full-employment
  • Real GDP
  • Actual real GDP
59
Q

What is the cost of unemployment?

A

GDP gap

60
Q

What is the economic problem?

A

Providing for people’s wants and needs in a world of scarcity

61
Q

Scarcity

A

Condition in which wants are forever greater than the available supply of time, goods and resources

62
Q

Scarcity forces us to…

A

Make choices

63
Q

What are resources?

A

Categories of inputs used to produce goods and services

64
Q

What are the three categories of resource?

A
  • Land
  • Labour
  • Capital
65
Q

Land resource

A

A natural resource

66
Q

Labour

A

Mental + physical capacity of workers to produce goods and services

67
Q

Entrepreneurship

A

Special type of labour

68
Q

Capital

A

Physical plants, machinery and equipment used to produce other goods

69
Q

Financial capital

A

Money used to purchase capital

70
Q

Economics

A

Study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimited wants

71
Q

Macroeconomics

A

Branch of economics:

  • Studies decision-making for the economy
  • Focus on inflation, unemployment, economic growth
72
Q

Microeconomics

A

Branch of economics:

  • Studies decision-making by a single individual
  • Individual decision making within an economy
73
Q

Scientific method

A
  1. Problem identification
  2. Model development
  3. Testing a theory
74
Q

Purpose of an economic model

A

Forecast or predict the results of various changes in variables

75
Q

What is presumed when testing a model?

A

Ceteris paribus

76
Q

Ceteris paribus

A

While certain variables change, all other things are unchanged

77
Q

Positive economics

A

Analysis limited to statements that are verifiable

  • Uses testable statements
  • “if-the” statement
78
Q

Normative economics

A

Analysis based on value judgement or opinions and uses words such as ‘good’, ‘bad’, ‘ought-to’

79
Q

Slope of a line

A

The ratio of change in the variable on the vertical axis to change in the variable on the horizontal axis

80
Q

When price changes

A

There is movement along a curve

81
Q

When something other than price changes…

A

The whole curve shifts

82
Q

What is an example of a change other than price?

A

When income increases, the whole demand curve shifts upwards

83
Q

Price elasticity and demand, elastic

A

Ed > 1

84
Q

Price elasticity and demand, inelastic

A

Ed<1

85
Q

Price elasticity and demand, unitary elastic

A

Ed = 1

86
Q

What can cause a shift in a demand curve

A

Number of buyers in a market, tastes and preferences

87
Q

What can cause a shift in a supply curve

A
  • Technology
  • Number of sellers
  • Resource prices
  • Taxes
88
Q

Two types of price controls

A
  • Price ceilings
  • Price floors
89
Q

Price ceiling

A

Maximum price a seller can charge (mandated by government)

90
Q

Purpose of price ceilings on bread

A

Needy people will pay lower bread price than the eqilibrium price

91
Q

Why may price controls be counterproductive

A
  • Shortages
  • Illegal markets
  • Less quality
92
Q

What are examples of price ceilings?

A
  • Land rent control
  • Wage and price controls
93
Q

What is a price floor?

A

Minimum price a seller can be paid

94
Q

Examples of price floor

A
  • Minimum wage law
  • Agricultural price supports
95
Q

Why do we have price ceilings and floors?

A

Because of failures in the free market

96
Q

Market failure

A
  • Market equilibrium leads to too few/many resources
  • Price system fails to achieve society’s goals
97
Q

Sources of market failure

A

Lack of competition, externalities, public goods and income inequality

98
Q

What did adam smith say about competition?

A

There must be competition for markets to function properly

99
Q

What happens when competition is lacking?

A

Market failure

100
Q

Externality

A

Cost or benefit imposed on other people than the consumers and producers of a good or service

101
Q

Negative externality

A

Detrimental to third parties, pollution

102
Q

Positive externality

A

Beneficial to third parties, vaccinations

103
Q

Solve market failure

A
  • Taxes
  • Subsidies
104
Q

% increase/decrease calculated by…

A
  • Difference between the two numbers
  • Divided by the original number
105
Q

What effect on sales would a 10% increase in apple prices have?

A

Depends on the price elasticity of demand for apples

106
Q

Elasticity

A

Responsiveness/sensitivity to a change in price

107
Q

Price elasticity of demand

A

Ratio of % change in the quantity demanded of a product to a % change in its price

108
Q

Elastic demand

A
  • % change in quantity demanded > % change in price
  • Change more than 1% in quantity demanded in response to a 1% change in price
109
Q

Inelastic demand

A
  • Elasticity coefficient > one and total revenue
  • Change of <1% in quantity demanded in response to a price
110
Q

Unity elastic demand curve

A

% change in quantity demanded = % change in price

111
Q

Perfectly elastic demand curve

A
  • Decline in quantity demanded to zero
  • Demand curve is horizontal
  • Elasticity coefficient = infinity
112
Q

Perfectly inelastic demand

A
  • No change quantity demanded in response to price changes
  • Quantity demanded doesn’t = change as the price changes
  • Demand curve is vertical
  • Elasticity coefficient = 0
113
Q

Income elasticity of demand

A

Ratio of % change in the quantity demanded of a good to a given % change in income

114
Q

Cross-elasticity of demand

A

Ratio of % change in quantity demanded of a good to a given % change in price of another good

115
Q

Price elasticity of supply

A

Measure of the responsiveness of the quantity supplied to a change in price

116
Q

What decides who pays what part of the tax increase

A
  • The more elastic the demand, the more the corporation pays
  • The less the elastic demand, the more the consumer pays
117
Q

The three economic questions

A
  • What to produce
  • How to produce
  • For whom to produce
118
Q

Production possibilities curve

A
  • Illustrates economy’s capacity to produce goods
119
Q

Technology

A

Body of knowledge and skills applied to how goods are produced

120
Q

Economic growth

A

Ability of an economy to produce greater levels of output

121
Q

What makes economic growth possible?

A
  • Increase production in excess
  • Research + development
122
Q

What happens when a country doesn’t invest in new technology

A

Everything else being equal, the country will not grow

123
Q

Explicit costs

A

Payments to nonowners of a firm for their resources

124
Q

Implicit costs

A

Opportunity costs of fusing resources owned by the firm

125
Q

Implicit costs example

A
  1. Investing your nest egg in your own enterprise
  2. Giving up earning interest on that money
126
Q

Total opportunity costs =

A

Implicit costs + explicit costs

127
Q

The long run

A

Period of time so long that all inputs are variable

Agroeconomics (2 decks)

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