Intro to Agribusiness Test 1

Agribusinesses create around _______ new food products each month

1000

The average American consumer spends about ________ percent of their disposable income on food

11

United States farmers produce ______ percent of world agricultural output

12

A single farm worker produces, on average, enough food for ___________ people

150

Farmers receive approximately _________ percent of each dollar spent on food

16

Since 1950, the distribution of farm numbers and annual sales has shifted to where ____ percent of US farms produce approximately _____ percent of the total US output.

2 and 50

Read the scenario and answer the following questions. Scenario: When the price of wine is $10 per bottle, Thomas purchases 30 bottles every month. Later, the government introduces a 50% tax on all alcoholic beverages, which is to be completely borne by consumers. This increases the price per bottle and reduces Thomas's consumption to 12 bottles of wine a month. Calculate Thomas's arc price elasticity of demand for wine and give your answer in absolute value (no negative sign): [hint: do not forget to enter the absolute value of your answer]

2.14

T/F: The foundation for a firm's product offering is the expected product which delivers the bare minimum set of features that the customer expects

False

Overcomes value, time and space separation

Financing function

4 types of utilities of marketing:

Form, place, time, possession

The marketing system performs nine functions (selling, buying, storage, transportation, processing, grades and standards, financing, risk-taking, and market information) to complete the production process and add four types of utility to products. What are the four types of utility (satisfaction) consumers receive?

Form, place, time, possession

Often the most difficult step in the decision making process

Identifying the problem

If the price elasticity of demand is 1.6 for chicken, cutting the price of chicken will:

Increase revenue

The unifying theme that ties everything a manager does together is the desire to maximize the _________ ________ of the firm by profitably ______________ customer's needs.

Log-run profits; satisfying

One or more products in a product mix are offered at a specially reduced price for a limited time:

Loss-leader pricing

Higher price elasticity of demand means that a consumer's demand is:

More responsive to changes in price

5 barriers to consumer satisfaction:

Ownership, time, space, value, and information

In order to increase consumer satisfaction the marketing system must find ways to overcome five barriers to consumer satisfaction. The five barriers to consumer satisfaction are:

Ownership, time, space, value, and information

Overcomes the separation of time

Storage function

T/F: All members of the food system must be concerned with satisfying consumer needs in order to earn a profit.

True

T/F: Being an effective manager is all about doing things well and at the lowest cost

True

T/F: Business management is a profession that applies knowledge from a diverse set of academic disciplines such as economics, statistics, psychology, and mathematics

True

T/F: Consumers purchase the satisfaction that products give them, not goods and services

True

T/F: Economics gives people the ability to make good decisions when faced with choices about where to spend their time, money, and energy

True

T/F: Good decision making requires clear and logical thinking. Managers must understand the problem, objectively weigh alternatives, effectively implement the best solution

True

T/F: The marketing approach is based on the idea that a successful firm first finds out what consumers want and then develops a product that meets those needs

True

T/F: When done efficiently and fairly, marketing improves the overall efficiency of the economy, increases producer profits, and increases consumer satisfaction.

True

Overcomes the separation of space

Transportation function

T/F: Sales is the focus of the modern marketing system

False

Agribusiness management is all about the ____________ and integration of technology in ways that __________ people's well-being.

Adoption; improves

Overcomes the separation of ownership

Buying and selling function

9 Marketing Functions:

Buying, selling, storage, transportation, processing, grades and standards, financing, risk-taking, and market information

Products sold above some base sales projection are priced slightly greater than additional out-of-pocket costs of handling:

CTO pricing

Factors that cause a movement along the demand for a product include:

Change in own product's price

Prices based on competitors pricing:

Competitive pricing

As the agri-food system has evolved and become more efficient since 1950, who are the biggest benefactors of the increase in scope and size of the system?

Consumers

When performing the _________ Function of Management, marketing managers need information on sales, prices, market shares, profit levels, and so on to evaluate their decisions in these areas and to determine whether they need to be changed.

Controlling

Add a constant margin to the basic cost of the individual product or service:

Cost Pricing

Add a constant margin to the basic cost of the individual product or service:

Cost pricing

Increased herd size leads to greater demand for feed soybean meal, which leads to a greater demand for fertilizer to grow the soybeans, which leads to a greater demand for natural resource extraction to produce fertilizer. This effect is referred to as:

Derived demand

As an individual consumes additional units of a good, the utility obtained from each additional item _________________.

Diminishes

This management function is often the most time consuming function using up some 90 percent of a manager's time

Directing

Offers consumers a reduction from list price:

Discount pricing

The Three Es of Long-Run Business Success are:

Efficiency, effectiveness, and economic well-being

What does your answer in question 2 above tell you about Thomas' elasticity of demand over the price range? In other words, when the tax is put in place and raises the price of wine (and Thomas reduces his purchases) how would you classify Thomas' response to the price change?

Elastic

T/F: Corporate farms dominate the US farming landscape with 99 percent of all farms and acreage in the US being owned by corporations.

False

T/F: Marketing encompasses only the business activities that address the time and space barriers by coordinating the flow of goods and services from producers to consumers.

False

T/F: Planning starts with a business plan. The business plan begins with the purpose (what the firm intends to do) and the oobjective (how to accomplish the purpose).

False

T/F: Raw commodities flow from farms and ranches directly to food manufacturers in the Agri-Food System.

False

Product offered at a low price to gain broad market acceptance quickly:

Penetration pricing

The Four Functions of Management are:

Planning, organizing, controlling, and directing

High prices used to communicate a prestige image:

Prestige pricing

Overcomes value separation

Processing function

Effective managers manipulate the Four Ps of Marketing to find the right mix of attributes that meet consumer needs. The Four Ps of Marketing are:

Product, price, place, promotion

Establish prices that are emotionally satisfying

Psychological Pricing

The act of __________ a consumer need is what gives a business its ________ to earn a profit

Satisfying; right

American consumers have started consuming more vegetable soybeans (edamame). This change in consumer tastes and preferences would be represented by a ______________ of the demand curve to the ________________.

Shift; right

Product offered at a high price to make high profits from initial sales:

Skimming the market pricing

Consumers do not buy products. What is it that they actually buy?

The satisfaction the product gives them

Prices set at a level just below estimated perceived value of the product

Value-based pricing