AGBM 102 Final

The average American spends what percentage of their income on food? *10% *15% *20% *25%

10%

Which of the following factors has not affected food consumption in the United States in recent decades? *The aging of the U.S. population *A reduction in average household size *An increase in ethnic diversity *An increase in the average price of food

An increase in the average price of food

Which of the following best describes a market? *A physical location where goods are traded by buyers and sellers *A virtual location where goods are traded by buyers and sellers *Any context in which transactions occur between buyers and sellers *Any context which gives fair prices for buyers and sellers

Any context in which transactions occur between buyers and sellers

The largest supplier of imports of agricultural products to the United States is ________. *Canada *China *The European Union *Mexico

Canada

Which of the following livestock products has seen a major increase in per capita consumption in the United States in recent decades? *Pork *Beef *Chicken *Fluid milk

Chicken

The leading destination for agricultural exports from the United States is ________. *India *The European Union *Mexico *China

China

If the supply of an agricultural product is inelastic a 1% change in its price will result in ________. *a 1% change in the quantity supplied *a change in the quantity supplied that is less than 1% *a change in the quantity supplied that is greater than 1% *no change in the quantity supplied

a change in the quantity supplied that is less than 1%

A specific tariff is ________. *the actual value of the tariff *the particular commodity that is subject to the tariff *a fixed charge per unit of imports *a fixed percentage charge on the value of imports

a fixed charge per unit of imports

The sharp fall in Russia's imports of poultry products from the United States in 2002 was caused by ________. *a shortage of poultry for export in the United States *a political dispute over tariffs on U.S. imports of steel from Russia *an increase in the value of the U.S. dollar against Russia's currency *a fall in economic growth in Russia

a political dispute over tariffs on U.S. imports of steel from Russia

For a market to be in equilibrium there must be _______. *a price at which supply equals demand *a stable price at which goods are traded *suppliers willing to accept a low price *consumers willing to pay a high price

a price at which supply equals demand

A contract for the supply of an agricultural product should specify *quantity and quality *price and quality premiums/penalties *delivery time and conditions *all of the above

all of the above

As the distance from a processing plant increases, ________. *the potential supply area increases *the cost of obtaining additional product increases, but at a decreasing rate *average collection costs fall if output per square mile is also increasing *all of the above

all of the above

The average cost of producing commodities on farms often declines due to ________. *the volume of output *increasing farm size *all of the above *the scale of operations

all of the above

If demand is inelastic, an increase in price will lead to ________. *a reduction in revenue *an increase in consumption *an increase in revenue *a reduction in supply

an increase in revenue

Demographic changes in the United States are leading to ________. *an increasingly segmented market for food *an increase in the demand for milk *an increase in the share of expenditure on food prepared at home *a reduction in the demand for vegetables

an increasingly segmented market for food

Which of the following statements is not correct? Supply elasticities for agricultural products ________. *are higher for beef than for lettuce *are higher for chicken than for beef *are higher for products that can be stored *are lower than for most manufactured (nonfood) products

are higher for beef than for lettuce

There has been a tendency for farms in the United States to become larger because ________. *farmers need larger farms in order to use modern farm equipment *there are economies of scale in production *larger farms can obtain higher prices for their products *farmers like to buy more land

there are economies of scale in production

Which of the following is not in the long-term interest of firms that supply inputs to farmers? *working with farmers to increase profitability *signing contracts with farmers for the supply of inputs *trying to get farmers to pay high prices for inputs *providing information and advice to their clients

trying to get farmers to pay high prices for inputs

If the price elasticity demand has the value -1, this is called ________. *inelastic demand *elastic demand *unitary elasticity of demand *an error since the value cannot be -1

unitary elasticity of demand

The production of chickens raised for meat (broilers) is largely concentrated in the southern parts of the United States because of ________. a. warmer temperatures and lower labor costs b. the ample supply of eggs in these areas c. high consumer demand for chicken in these areas d. the long tradition of raising chickens there

warmer temperatures and lower labor costs

Which of the following is the leading category of agricultural imports by the United States? *Wine *Coffee *Horticultural products *Beef

Coffee

Who is in the driver's seat as far as the functioning of the food system is concerned? *Food retailers *Consumers *Farmers

Consumers

Major producers of brands of breakfast cereals have been affected by slow growth in demand for their products. Which of the following strategies has notbeen widely used to deal with this? *Increased used of advertising *Diversification into other food processing activities *Reductions in prices for the branded products *Development of new products

Reductions in prices for the branded products

Terminal costs are ________. *fixed costs incurred before a product is transported *fees that have to be paid to trucking companies *the final bill after a product is transported *variable costs associated with different transport modes

fixed costs incurred before a product is transported

Since Pennsylvania is a corn-importing state, the law of one price suggests *that corn prices in Pennsylvania will be determined by how much corn Pennsylvania farmers plant *determined by the weather conditions in Pennsylvania *lower than in major corn-producing states in the Midwest *higher than in major corn-producing states in the Midwest

higher than in major corn-producing states in the Midwest

A put option *is used by farmers to hedge price risk *is used by feed processors to hedge price risk *is the right but not the obligation to sell a futures contract at a fixed price *is the right but not the obligation to buy a futures contract at a fixed price

is the right but not the obligation to sell a futures contract at a fixed price

Corn and soybeans are often produced on farms in the Midwest of the United States because ________. a. seed for these crops is cheaper in the b. Midwest than other regions midwestern farmers don't like to produce other crops, such as wheat c. most of the firms that purchase these crops are headquartered in the Midwest d. it is good farming practice to rotate the production of corn and soybeans

it is good farming practice to rotate the production of corn and soybeans

Grades for agricultural products are useful in *facilitating the communication of market information making it possible to have futures markets *helping to allocate products to different uses *making all of the above possible

making all of the above possible

If you want to increase your total revenue, you should put a product on sale if ________. *you are able to obtain additional supplies *the elasticity of demand is greater than one *the elasticity of demand is less than one *the elasticity of demand is equal to one

the elasticity of demand is greater than one

You are a corn producer holding a put option that you purchased for $4.80 per bushel for a premium of $0.20. At harvest time, the basis for corn is $0.20. Under which local price would you exercise the put option (sell the put)? *$5.00 *$4.20 $4.80 *$5.20

$4.20

In recent years, the share of exports in U.S. farm cash receipts has been roughly how much? *15% *25% *35% *45%

35%

Which of the following economic agents accounts for the largest proportion of the cost of a loaf of bread in the United States? a.Farmer b. Retailer c. Baker d. Flour miller

Baker

Small firms in the U.S. food industry dominate which of the following types of food processing? *Dairy *Sugar and confectionery *Fruit and vegetables *Bakeries

Bakeries

Which of the following has not been a factor in the growth of the fast-food segment of the restaurant industry in the United States? *Economies of scale *Consumer demand for convenience *Barriers to entry *Franchising

Barriers to entry

For the institutional segment of the food-service industry (e.g., schools and hospitals), what is the primary determinant of business behavior? *Provision of differentiated products *Location of facilities *Cost-effectiveness *Convenience

Cost-effectiveness

The United States imports a lot of agricultural products. Which of the following is not a reason for this? *U.S. consumers demand diversity in the products they consume. *Imports help to provide year-round supplies for some products. *Exporters subsidize shipments of products to the United States. *Imported products are often complementary to those produced in the United States.

Exporters subsidize shipments of products to the United States.

Which of the following categories of food tends to have the highest margin in retail food stores? *Canned goods *Frozen products *Fresh produce *Meat

Fresh produce

In contrast to the United States as a whole, which the following components is a small part of food processing in Pennsylvania? *Bakeries *Sugar and confectionery *Animal processing *Grains and oilseeds

Grains and oilseeds

Which of the following will not create a change in supply of wheat? * Higher fertilizer prices *Good weather in wheat-growing areas *Increased demand for bread *Introduction of a new high-yielding wheat variety

Increased demand for bread

Which of the following combinations of intercept and price cannot apply to a linear supply curve? *Intercept = -10; slope = 20 *Intercept = 10; slope = 10 *Intercept = 0; slope = 10 *Intercept = 10; slope = -20

Intercept = 10; slope = -20

Which of the following accounts for the largest proportion of total costs in restaurants? *Energy *Insurance *Labor *Taxes

Labor

Which of the following accounts for the largest share of marketing costs for U.S. food products? *Profits *Energy *Labor *Transportation

Labor

Markets perform what types of functions? *Physical, exchange, enabling *Value added, exchange, physical *Exchange, producer, consumer *Producer, consumer, value added

Physical, exchange, enabling

Which of the following are the three essential components of the food system beyond the farm gate? *Farm input supply, food processing, and food retailing *Processing, importers, and exporters *Processing, wholesaling, and distribution, retailing, and food service *Farm input supply, wholesaling, and distribution, retailing, and food service

Processing, wholesaling, and distribution, retailing, and food service

Which of the following is not a benefit of a good grading system? *Lowers transaction costs *Allows common storage *Provides market power to small producers *Improves price signals

Provides market power to small producers

Which of the following is not correct for transportation in the United States? *Costs per mile tend to decline with the volume shipped. *Costs per mile tend to decline with distance, if competing modes of transportation exist. *Shipping by truck involves higher fixed costs but lower variable costs than other modes. *Shipping by barge involves higher fixed costs than shipping by rail but lower variable costs than other modes.

Shipping by truck involves higher fixed costs but lower variable costs than other modes.

Tariffs on many U.S. agricultural imports are relatively low, but this does not apply to which of the following products? *Corn *Soybeans *Sugar *Wheat

Sugar

Which of the following should not be considered by a farmer in deciding whether to store grain this year? *The costs paid for constructing the silos that are on the farm *The monthly costs of storing the grain in the silos *The expected price of grain in future months *All of the above must be taken into account

The costs paid for constructing the silos that are on the farm

Which of the following is not likely to happen when the costs of marketing a food product increase? *The retail price will rise. *The demand for the product will increase. *The supply of the product will fall. *The price of the product at the farm level will fall

The demand for the product will increase.

Which of the following statements is not correct? *There has been an increase in the proportion of the U.S. population that is obese. *The share of total food purchases made up of "organic" products is increasing. *The distribution of food through public assistance programs is declining. *The real price of food (i.e., the price after adjusting for inflation) has tended to decline.

The distribution of food through public assistance programs is declining.

Providing that the domestic demand elasticity is not zero, which of the following statements is correct? *Excess supply will be less elastic than domestic supply. *Excess demand will be less elastic than domestic demand. *The excess supply elasticity will be larger than the domestic supply elasticity. *The excess supply elasticity will be larger than the domestic demand elasticity.

The excess supply elasticity will be larger than the domestic supply elasticity.

Which of the following statements is not correct? *Costs will rise if there are capacity constraints in the supply of transportation services. *Truck transportation has a smaller share of total ton-miles of agricultural products shipped than the share of total tonnage shipped. *Rail has high fixed costs since rail companies have to provide the rail infrastructure. *The volume of shipments by barge is relatively stable from month to month.

The volume of shipments by barge is relatively stable from month to month.

Which of the following is a characteristic of the food-away-from-home component of the U.S. food system? *There is lots of entry and exit of firms since barriers to entry are low. *Profits are higher than in food retailing because labor costs are lower. *Price discounting is rarely used to increase business volume. *Limited service restaurants have largely displaced full-service restaurants.

There is lots of entry and exit of firms since barriers to entry are low.

Which of the following is not consistent with the law of one price? *Prices in two regions differ by the costs of transportation. *The futures price for soybeans is higher than the local price. *The futures price for corn is lower than the local price. *These are all consistent with the law of one price.

These are all consistent with the law of one price.

A decrease in marketing costs for food will cause ________. *a fall in farm and retail prices *a fall in farm prices and an increase in retail prices *an increase in farm prices and an increase in retail prices *an increase in farm prices and a fall in retail prices

an increase in farm prices and a fall in retail prices

Which of the following would not be likely to cause a change in demand for U.S. beef? *a large increase in the supply of chicken *an increase in per capita consumer income *an increase in the cost of cattle feed *news that eating beef increases life expectancy

an increase in the cost of cattle feed

There is greater variability in movements of agricultural commodities by barge than by rail because ________. *there are fewer barges available than railcars to transport products *barge traffic is more likely to be affected by weather conditions *barge operators want to work seasonally, rather than year round *rail operators vary prices to make sure that railcars are used year round

barge traffic is more likely to be affected by weather conditions

The supply curve for agricultural products ________. *becomes more elastic over time *shifts to the right if the cost of inputs increases *becomes more inelastic over time *shifts to the left due to technological change

becomes more elastic over time

Agricultural supply is often slow to respond to increases in prices because ________. *biology imposes constraints on the ability of farmers to respond *farmers are naturally conservative and this limits their response *it can be difficult for farmers to discover what prices they can receive *when prices increase it can be difficult for farmers to find buyers for their products

biology imposes constraints on the ability of farmers to respond

The supply of agricultural products is often inelastic in the short run because ________. *farmers don't know what prices they will receive when they market their products *biology limits the ability of farmers to adjust output when prices change *farmers face constraints on obtaining inputs (e.g., livestock feed) *inelastic demand limits the amount that supply can adjust to price changes

biology limits the ability of farmers to adjust output when prices change

Retail food prices are often more variable than prices for other goods because ________. *retailers like to change food prices to attract customers *the supply of food is elastic but demand is inelastic *the demand for food is elastic but supply is inelastic *both supply and demand for food are inelastic

both supply and demand for food are inelastic

Which of the following is not correct? Shipping costs for agricultural commodities tend to be higher per unit if ________. *the volume involved is small *liquids, such as milk, are involved *bulk commodities (e.g., grain) are involved *perishable products (e.g., fresh fruit) are involved

bulk commodities (e.g., grain) are involved

Beef production in the United States tends to take place ________. *in the west of the United States *close to states in which livestock feed is produced *where the climate is mild *where there is adequate rainfall

close to states in which livestock feed is produced

It is difficult to get rid of barriers to trade because ________. *consumers don't mind paying higher prices for imported goods *domestic producers who benefit resist their elimination *countries that supply imports don't want barriers to be eliminated *no one benefits if trade barriers are eliminated

domestic producers who benefit resist their elimination

If the demand for a product is elastic, the quantity consumed will _______ *increase by more than 1% when price increases by 1% *increase by less than 1% when the price increases by 1% *fall by less than 1% when the price increases by 1% *fall by more than 1% when the price increases by 1%

fall by more than 1% when the price increases by 1%

The fixed asset theory implies that ________. *the average cost of production will decline with the volume of agricultural output *most farms will be family farms *farms may continue to operate at a loss for many years *there are barriers to entry in agriculture

farms may continue to operate at a loss for many years

The two marketing channels in the U.S. food system are ________. *public and private channels *unprocessed foods and processed foods *food at home and food away from home *domestic and international

food at home and food away from home

An "inferior good" is one ________. *for which demand increases if its price falls *that is not wanted by consumers *for which demand falls as incomes increase *for which demand increases as incomes increase

for which demand falls as incomes increase

If the demand for a product is inelastic, the quantity consumed will ________. *increase by more than 1% when the price rises by 1% *increase by less than 1% when the price falls by 1% *fall by less than 1% when the price falls by 1% *fall by more than 1% when the price increases by 1%

increase by less than 1% when the price falls by 1%

Increasing per capita income in the United States is leading to ________. *a significant increase in the per capita demand for food *increased demand for quality and diversity in food *more demand for private label food products *a decline in the average number of food calories consumed

increased demand for quality and diversity in food

In the modern model of food wholesaling and distribution, which of the following does not apply? *full truckloads of products are moved from warehouse to stores *inventories are kept at high levels *the warehouse is a transshipment point *facilities are located where they can serve a large number of stores

inventories are kept at high levels

A call option *is an insurance policy against low prices *can be used by a farmer to hedge feed costs *is an insurance policy against high prices *is cheaper than purchasing or selling a futures contract

is an insurance policy against high prices

Farming in the United States ________. *uses a lot of labor *is capital and energy intensive *has a high return on fixed assets *is dominated by corporate farms

is capital and energy intensive

The price elasticity of demand for food in the United States ________. *is elastic *has unitary elasticity *is inelastic

is inelastic

The producer of a differentiated food product ________. *can ignore costs because consumers don't care about prices *does not need to worry about competition from other branded products *is likely to cut prices in order to gain market share *is somewhat protected from competition because of brand identity

is somewhat protected from competition because of brand identity

Over the long term, a production quota will ________. *increase the disposable incomes of farmers and their families *lead to higher land prices *reduce consumer prices *increase consumption of the product

lead to higher land prices

If costs are involved in delivering a product from farmers to retailers, the elasticity of demand will be ________. *the same at the retail level and the farm level *You Answered higher at the farm level than the retail level *lower at the farm level than the retail level *lower at the retail level than the farm level

lower at the farm level than the retail level

Wisconsin produces a lot of hard cheese (e.g., cheddar) because _______. *major centers of population are far away, so it makes sense to use milk in this way *people who live in Wisconsin like to consume lots of cheese dairy farmers in Wisconsin have been making hard cheese for a long time and don't want to change *it's cold a lot of the time in Wisconsin, so using milk to make cheese is less costly

major centers of population are far away, so it makes sense to use milk in this way

Less than 4% of U.S. farms generate what percentage of the total value of farm output ________. *more than 70% *roughly 50% *roughly 60% *more than 60%

more than 60%

Which of the following is not correct? A dairy processing plant ________. *will be smaller in size the higher the average cost of transporting milk to the plant *must obtain enough milk to operate the largest processing equipment available *will have lower costs in sourcing milk if the density of farms in its area is high *will be able to attract milk from farther away if it increases the price it pays

must obtain enough milk to operate the largest processing equipment available

There are fresh peaches in Pennsylvania supermarkets even when the local peach crop fails because *peaches harvested last year are brought out of storage *supermarkets subsidize imports of peaches to make up for the short crop *peaches grown elsewhere are shipped into Pennsylvania *local peaches are canned and fresh peaches come from other states

peaches grown elsewhere are shipped into Pennsylvania

Price at the farm level is more variable than price at the retail level because ________. *retailers exploit their market power to keep farm prices low *the elasticity of demand is higher at the farm level *price flexibility is higher at the farm level *the elasticity of supply is elastic

price flexibility is higher at the farm level

Price flexibility is the percentage change in ________. *quantity supplied given a 1% change in quantity demanded *price given a 1% change in the quantity supplied *quantity demanded given a 1% change in price *price given a 1% change in the quantity demanded

price given a 1% change in the quantity supplied

If excess demand for a product is negative, this means that ________. *domestic demand exceeds domestic supply *domestic supply is too low to satisfy domestic demand *prices are low enough for imports to occur *prices are high enough for exports to occur

prices are high enough for exports to occur

If excess demand for a product is positive, this means that ________. *prices are low enough for imports to occur *domestic supply is higher than domestic demand *domestic demand equals foreign supply *prices are high enough for exports to occur

prices are low enough for imports to occur

Since it costs money to store a product for sale in the future, this means that *prices in the future will be higher than at harvest time to cover the costs of storage *prices at harvest time will be higher than in the future to cover the costs of storage *demand in the future will be lower than at harvest time *demand at harvest time will be lower than in the future

prices in the future will be higher than at harvest time to cover the costs of storage

An efficient market is one which generates ________. *high and stable prices for producers *prices that reflect information about supply and demand *low and stable prices for consumers *prices that are fair to both producers and consumers

prices that reflect information about supply and demand

The producer of a private label breakfast cereal for a supermarket ________. *is able to extract a price premium from the retailer *has a guaranteed market for the product *primarily competes for the supermarket's business on the basis of price *is likely to have higher profits than a manufacturer of branded cereals

primarily competes for the supermarket's business on the basis of price

When trade barriers are used to increase prices received by domestic producers of a commodity, this is called ________. *food security *import promotion *protectionism *consumer protection

protectionism

Food wholesalers are important in the food system because they ________. *provide break-of-bulk and product assembly functions *provide a place for processors to store their products *provide a market for farmers *supply a limited range of products to stores

provide break-of-bulk and product assembly functions

The largest single reason cited by food processing firms for locating in Pennsylvania is ________. *the favorable climate *ample supply of labor *proximity to consumers *availability of raw materials

proximity to consumers

A livestock farmer who wants to hedge 5,000 bushels of corn that they will need to feed their animals in six months' time will *sell a futures contract now for 5,000 bushels, buy a contract for that amount in six months' time, and then buy the corn locally *buy that amount of corn now and store it for six months *purchase a futures contract now for 5,000 bushels, sell a contract for that amount in six months' time, and then buy the corn locally *wait six months and buy the corn locally

purchase a futures contract now for 5,000 bushels, sell a contract for that amount in six months' time, and then buy the corn locally

The leading agricultural export from the United States in terms of total value is ________. *cotton *beef *soybeans *corn

soybeans

Because of its biological nature, the quantity of agricultural output varies from season to season. This creates a need for *transportation *storage *sorting and grading *assembly

storage

If the value of the dollar rises against the currency of a country supplying food imports to the United States, the import ________. *demand curve will shift to the right and become more elastic *demand curve will shift to the right and become less elastic *supply curve will shift to the right and become more elastic *supply curve will shift to the right and become less elastic

supply curve will shift to the right and become more elastic

A modal break point is the distance at which ________. *it becomes profitable to load a shipment onto another mode of transportation *the choice of the least cost mode for a shipment changes *the costs of transporting a shipment begin to decline *a shipment using a particular mode has to be unloaded

the choice of the least cost mode for a shipment changes

Many types of fast food (e.g., hamburgers), are often eaten with French fries. If the price of French fries increases sharply due to a reduction in the availability of potatoes, we would expect ________. *the price of hamburgers to increase *the consumption of hamburgers to fall *the price of French fries to fall *the consumption of French fries to increase

the consumption of hamburgers to fall

If two goods are substitutes in consumption, when the price of one increases ________. *the demand curve for the other will shift to the right *the demand curve for the other will shift to the left *the consumption of the other will increase because its price will fall *the consumption of the other will rise because its price will increase

the demand curve for the other will shift to the right

The basis for corn is *the price in the Chicago futures market *the price received when selling to the local feed mill *the difference in price between selling now and in some future month *the difference between the local price and the price in the futures market

the difference between the local price and the price in the futures market

Since Pennsylvania is a corn-importing state, if the costs of transportation fall because fuel becomes cheaper, you should expect *the demand for corn to fall in Pennsylvania *the price of corn to fall in Pennsylvania *the price of corn to rise in Pennsylvania *Pennsylvania farmers to ship corn out of the state

the price of corn to fall in Pennsylvania