Ag. Economics-210

Assume the Base Year is 2015, and calculate the output index value for 2014. Year Output (Lbs./Acre) 2014 2300 2015 2500 2016 2200 2017 2600

.92

Calculate the Price Index for 2016 as indicated. The Base Year is 2015. round the nearest 100th Year Output (million lbs.) 2013 201,218 2014 206,046 2015 208,633 2016 204,256

.97

The base year is indicated by:

1.00

Given the table below, what is the Price Index for 2014 assuming the Base Year is 2013. Year Output $ per bushel 2013 10,000 $4.00 2014 12,000 $5.00

1.25 (5.00/4.00)

Consumers in the United States spend approximately _____% of their disposable income on food and rarely experience an interruption in the supply of food products. (Write the number)

15%

What time period did the "Great Recession" occur in the US?

2007-09

Over _____% of CA's almond crop is exported to this destination.

36% and European Union

Which of the following would NOT fit the description of a "capital" input?

40 acres of walnuts

What is the Marginal utility for A? ____________ Utility Table #sodas-TotalUtility-MarginalUtility 1 20 N/A 2 25 A 6 37 B

5 (addition of one more 25-20)

What is the #1 commodity produced by Fresno County?

Almonds

Engel's Law states:

As income rises, the portion of the dollar we spend on food falls

Which of the following is an example of an Agricultural Cooperative operating in California? (As discussed in class)

Blue Diamond

What are the top 3 states for production agriculture in order of their gross income ?

California, Iowa, Nebraska

Which of the following legislative Acts exempted Agricultural Cooperatives from Anti-Trust Laws?

Capper - Volstead Act

The Federal Reserve began operating in 1914 as the U.S. ___________ _______

Central Bank

What is meant by "comparative advantage" when discussing agricultural trade?

Compared to other states CA has an advantage in this aspect of agricultural production.

A "bumper crop" in agriculture shifts the supply curve to the left.

False

A monopoly can consist of one or more businesses selling the same product.

False

Competitive markets work best when there are only a few sellers.

False

Raising the "discount rate" would be an example of "Expansionary" monetary policy.

False

The Federal Reserve stores all of the gold used to back US dollars.

False

The change in the economic welfare of the consumer can be approximated by the concept of "consumer surplus".

False

One way to reduce agricultural surpluses is to provide food subsidies. List one example as given in your text of a "Food Subsidy" provided to needy Americans. (Warning: Spell it EXACTLY as it is given in the text, do NOT use an acronym).

Food Stamp Program

Match the commodities with the counties that produce them.

Kern County - pistachios Fresno County - Almonds Tulare County - Milk Monterey- Strawberry & Salad Greens

Which economic input class includes all services used in the production of a product with the exception of management ________________.

Labor

The break-even point occurs where?

MC=ATC

The shut-down point occurs where?

MC=AVC

Which of the following is NOT a form of "Government Intervention" in agriculture?

Market price intervention

Name CA's most valuable commodity according to the 2019 Crop Report.

Milk & Cream

_________________ __________________ refers to the condition in perfect competition where all sellers of the product have access to information about prices, production costs and historical production data. (starts with a capital letter please)

Perfect Information

Define what is a production function?

Production function is the function that helps the producer know how much one this is needed/used. Like money wise and other capitals.

How does California's cultural diversity provides an economic benefit to the state?

Provides opportunities to discover new export markets and facilitates trade with other countries.

During the "Great Recession" which was the financial crisis caused by the bankruptcy of major financial firms, the federal government utilized a nonconventional method to stimulate the economy. What was it called?

Quantitative Easing

In studying consumer behavior, we assume consumers are ____________________ and _______________ their utility/satisfaction.

Rational - maximize

If the price index received by farmers for 2015 was .97. Which statement would be most accurate?

Relative to the base year, prices were 3% lower in 2015.

Which of the following countries is NOT one of California's major trading partners? (Top 10 list!)

Russia

A branch location of the Federal Reserve is located in which city in California?

San Francisco

Which of the Anti-Trust Laws below was the first of its kind and is still playing a role in preventing the formation of monopolies in the USA?

Sherman anti -trust act

During the Covid 19 pandemic, the federal government has been pumping billions of dollars into the American economy. What immediate effect does this have on the demand curve?

Shifts the demand curve right

Which stage of the production function does the "Law of Diminishing Marginal Returns" start?

Stage II

Which of the following commodities is not unique to California (commodities that other states produce as well as CA)?

Strawberries

Which of the following statements is TRUE? (Select just the letter of the correct statement.)

The Marginal Utility curve has a negative slope

Which definition best describes ATC (Average total cost)?

The break-even cost

The marginal utility of a good such as ice cream declines with increases in consumption of that good. The phenomenon is referred to as the _________________________ (An economic law!)

The law of diminishing marginal utility

"Consumer Equilibrium" in economics refers to which of the following?

The point where the isoutility curve and the budget line are tangent

Which of the following markets is likely to most nearly reflect a perfectly competitive market?

The wheat market

"No entry barriers " refers to the fact that anyone can start a business of that type.

True

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

Advertising and Promotion can cause the demand curve to shift to the right.

True

An example of an "entry barrier" could be a patent or special licensing required to start a business.

True

Because famers are typically engaged in purely competitive markets, they lack market power.

True

Because most farmers pay cash for their assets, they have the lowest capital invested per worker of any sector of the economy.

True

Contractionary monetary policies drive up interest rates and depress investment expenditures by businesses and households.

True

Marginal cost is the additional cost created by the next unit of production.

True

The "Law of Demand" states that: "As price increases, demand decreases".

True

The "fiduciary monetary system" is what the US relies on to support its economy. It is the belief that a piece of paper(money) can be exchanged for goods and services.

True

The food and fiber industry is one of the most highly regulated industries in the United States.

True

Which of the following is the best example of an oligopoly (as discussed in class)?

US Farm Machinery

Which of the following would NOT be considered a "high value" commodity?

Wheat

Which US President established the Federal Reserve?

Woodrow Wilson

Which of the following would be considered and "inferior" good?

a T-bone steak

A food safety scare such as an "E Coli" outbreak in beef would cause what type of immediate change on the demand curve?

a shift to the left

Which of the following is the most "Liquid" asset?

cash in savings account

For Herman, 4 wings and 3 bottles of Dr. Pepper generate the same utility as 6 wings and 2 bottles of Dr. Pepper. These combinations are called _____________________ ____________________. And form the basis for the calculation of Marginal Rate of Substitution. (All lower case, two words)

consumer bundles or consumption bundles

In the example of an inferior good; as consumer income increases, demand for the good will ________________.

decrease

"Fixed resources" are those resources that __ ____ _______ even as output increases (think of the pizza oven example in the video!!).

do not change - don't change

___________________ costs are those costs which do not change even as output increases.

fixed

Which of the following is NOT a factor that affects consumer demand as we studied it in class?

global politics

According to a supply and demand curve, surplus occurs when prices are too ___________. (High or Low)

high

Given the following table, relative to 2013 (base year) the price of corn for 2014 was? Year Output $ per bushel 2013 10,000 $4.00 2014 12,000 $5.00

higher by 25 %

_______________________ products are those which are undifferentiated in the market place and this prevents buyer preference. In agriculture, grades an standards enforced by the USDA make this a regular occurrence. (start with a capital letter please!)

homogeneous - same

Businesses can be classed by: number of firms, product differentiation, market information and entry/exit barriers. What type of firm would be a business firm like Nutcher Milk?

imperfect competition

Another name for an "isoutility curve" is an __________________ ________________.(No capitals, all lower case, 2 words)

indifference curve

In general, demand for agricultural products (food and fiber) is:

inelastic

The graph of alternative consumption bundles that provides a consumer with a given level of satisfaction is called a (n) _____________________ curve. (Select just the letter of the correct answer.)

iso-utility

Which economic input class includes both renewable and nonrenewable resources. ______________

land

Which agricultural commodities generally do NOT receive agricultural subsidies?

livestock and meat products

A "bumper crop" for a farmer generally results in_______________ (lower or higher) prices?

lower

This input class requires leadership, organization, decision-making and profit maximization.

management

The intersection of the supply and demand curves represents _____________________.

market equilibrium

In general, oligopolies compete using the practice of:

non-competition

In the beef processing industry, three firms - Conagra, Excel and IBP - comprise roughly 85% of the buying side of the market. This situation characterizes a(n) ______________. (no caps)

oligopoly

Which of the following types of market structure is most often accused of "collusion"?

oligopoly

In a perfectly competitive market like agriculture, producers must accept prices for products, they are called ___________ _____________. (two words no caps)

price takers

Producers involved in pure competition are "________ _______" and have no control over market price which is determined by supply and demand.

price takers

Which of the following would be a characteristic of an "Imperfectly Competitive" market?

product differentiation

"I wanted to purchase a new laptop but I just couldn't afford it." This statement portrays that we are all faced with what economists call ____________________ _____________________.

the budget constraint

____________________ costs are those costs which change as output changes.

variable

In a competitive market, the producer can increase profits by cutting which costs?

variable cost

In a competitive market, the producer can increase profits by cutting which costs?

variable costs