FBM - Test A
At 200 units of output, total cost is $36,000 and total variable cost is $20,000. What does total fixed cost equal at 200 units?
$16,000
A monopolist can sell 15,000 units at a price of $100 per unit. Lowering price by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?
$34,500
A farmer has 1,000 acres on which he has previously grown corn. His yield per acre is 100 bushels of corn. If the corn payment rate is $0.43 a bushel, his production flexibility contract payment equals __________ .
$36,550
Price rises from $10 to $15, and the quantity demanded falls from 100 units to 90 units. What is the coefficient of the price of elasticity of demand between these two prices?
0.26
If quantity demanded rises by 90 percent as price falls by 40 percent, the coefficient of price elasticity of demand equals __________ .
2.25
Which of the following will NOT shift a supply curve?
A change in the good's own price.
A normal good is __________ .
A good for which the demand rises as income rises
A "quota" is __________ .
A legal limit on the amount of a good that can be imported
If an increase in income results in an increase in the demand for chicken, the chicken is __________ .
A normal good
At a price above equilibrium price, there is __________ .
A surplus
Which of the following is true?
Accounting profit is the difference between total revenue and explicit costs
Some years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they got their molecules twisted and came up with one of the weakest glues ever made. Rather than pouring it down the drain, they tried coating some paper with it. Voila! The "Post-It Note" was born. In this case, 3M was acting as
An entrepreneur
If Cassandra bought 16 cotton blouses last year when her income was $40,000 and she buys 24 cotton blouses this year when her income is $35,000, then blouses are __________ .
An inferior good
If Max's demand for hot dogs falls as his income rises, then hot dogs are __________ .
An inferior good
In the theory of perfect competition, __________ .
Buyers and sellers of the product know everything that there is to know about the product
A fixed input is an input whose quantity
Cannot be changed as output changes in the short run
Economics is a social science that involves the study of how individuals __________ .
Choose among alternatives
When an increase in the level of production of one enterprise causes a reduction in the level of production in another enterprise, these two enterprises are said to be
Competitive
When economists speak of scarcity, they are referring to the
Condition in which people's wants outstrip the limited resources available to satisfy those wants
The _______ is King in the market place
Consumer
If the industry level supply curve shifts right, what result is most likely?
Decrease in price
Suppose that one fixed and one variable input are used to produce good X. As the marginal physical product of the variable input increases, then marginal cost __________ .
Decreases
Any time a consumer will take more only at lower prices is called
Demand
The relationship between quantity purchased and price is known as
Demand
Which of the following terms describes this situation: Quantity taken will increase only if the price comes down?
Demand
Price movements over time occur because of
Demand shifts, Supply shifts
The demand for a product at the farm level is a(n)
Derived demand
Selling through a farmers' market or roadside market is known as
Direct Marketing
The law of supply states that price and quantity supplied are __________ .
Directly related, ceteris paribus
The dynamic process of searching for the equilibrium or market - clearing prices is called
Discovery
Concentration ratios are NOT perfect guides to industry concentration, because they __________ .
Do not take into account foreign competition and competition from substitute goods
A "price-taker" is a firm that __________ .
Does NOT have the ability to control the price of the product it sells
In a monopolistically competitive industry, __________ .
Each firm in the industry produces a slightly differentiated product
Which of the following is NOT an assumption of the theory of perfect competition?
Each firm produces and sells a differentiated product.
A natural monopoly exists when __________ .
Economies of scale are so large that only one firm can survive and achieve low unit costs
Markets that quickly and accurately assimilate all available information into market prices are referred to as __________ markets.
Efficient
Which of the following industries is the best real-world example of monopolistic competition?
Electricity generation
If a firm earns a normal profit, then it has generated revenues
Equal to the sum of implicit and explicit costs
If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is __________ the percentage fall in price, and total revenue __________ .
Equal to; remains constant
The price where demand and supply intersect is known as
Equilibrium
A cost that is incurred when an actual monetary payment is made is a(n) _______ cost
Explicit
Costs that do not change with output are called __________ costs
Fixed
Utility means satisfaction; products have what type of utility?
Form, Place, Time
Which of the following is NOT one of the categories of resources?
Government
The primary purpose of the production function is to determine
How much to produce
What can an agriculture producer determine from the Production Function
How much to produce
What does the Production Function indicate for an agricultural producer?
How output responds to inputs
The cost of resources used in production for which no actual monetary payment is made is a(n) _____ cost
Implicit
A tariff is a tax on __________ .
Imports
Which of these statements is false?
In the short run, all inputs are fixed inputs
Which of the following statements is true?
In the short run, changes in output can only be brought about by a change in the quantity of variable inputs
If the percentage change in quantity demanded of a good is less than the percentage change in income, then the good is said to be __________ .
Income inelastic
If the percentage in quantity demanded of a good is equal to the percentage change in income, then the good is said to be __________ .
Income unit elastic
The law of demand states that price and quantity demanded are __________ .
Inversely related, ceteris paribus
Average fixed cost
Is usually greater at lower levels of output than at higher levels
If a monopolistically competitive firm raises its price, then __________ .
It should expect to lose some, but not all, of its customers
The operator knows that the value of the dollar on the world market can have an impact on grain markets. If the dollar increases in value related to other currencies, it will impact U.S. corn and wheat prices in what way?
Make corn and wheat prices higher on world market
The middlemen in the marketing system operate on
Margin
The rule of profit maximization says that firms should produce at the point where __________ .
Marginal revenue equals marginal cost
Comparing the retail price to the farm price for an agricultural commodity allows you to determine the portion of each dollar spent at the retail level that farmers receive for their commodities. The difference between retail value and the farm value is
Marketing margin
Which of the following statements is false?
Money must change hands before a cost can be incurred
If price rises and total revenue falls, __________ .
NONE of the above
At a price of $15, Marta buys 3 CD's per month. When the price increases to $20, Marta buys 2 CD's per month. Luz says that Marta's demand for CD's has decreased. Is Luz correct?
No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same.
A monopoly may exist because __________ .
One firm has the exclusive ownership of a secure resource
An agriculture producer learns what from the production function
Output responses to an input
One major reason for the law of demand is that __________ .
People substitute relatively lower-priced goods for relatively higher-priced goods
A concentration ratio indicates the __________ .
Percentage of total sales accounted for by the (for example) four larger firms
If quantity demanded is completely unresponsive to changes in price, demand is __________ .
Perfectly inelastic
Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in __________ .
Price
Suppose that the supply curve shifts right. What is the most likely effect on price and quantity?
Price will decrease and quantity will increase
The point on a production function graph where marginal cost equals marginal revenue is where
Profits will be the greatest
A farmer who is willing to pay a set dollar amount to establish floor or base price to be received would do what
Purchase a put option
On a chart, a line that connects all the high points as the markets move higher forms a trend line. When projected out, it form points of
Resistance
An increase in the number of buyers in an area will result in a __________ .
Rightward shift in the demand curve
Price movement across months within the year is _____ variability
Seasonal
Real-world markets that approximate the four assumptions of the theory of perfect competition include __________ .
Some agricultural markets, The stock market
An unrecoverable cost that should be disregarded in any current or future decision is also called a(n) _____ cost
Sunk
The two most important driving factors that influence the market price are
Supply and demand
It is impossible to be competitive in the complex commodity marketplace without
The ability to collect accurate data
What does state two in production function graph determine
The amount of variable input to use
What does marginal cost measure?
The change in the cost by adding another unit of input
What is Stage II of the Production Function?
The decision making stage
What is the Law of Supply?
The higher the price, the higher the quantity supplied will be
The fewer substitutes for a good, __________ .
The lower its price elasticity of demand
In the theory of perfect competition, __________ .
The single firm's demand curve is horizontal
Economic profit is the difference between total revenue and
The sum of explicit and implicit costs
"Entrepreneurship" is
The talent of organizing the use of land, labor and capital, among other things
Tobacco production is one of the more heavily subsidized industries in the United States. Suppose that as a result of intense lobbying from health-related concerns, Congress repeals the tobacco farms' subsidies. Which of the following scenarios would likely occur?
The tobacco farms' supply curve would shift leftward, since it would now cost more to produce each level of output.
The N.M. Corporation has exactly the same costs of production as last year except for fixed costs, which are $50,000 this year compared to $30,000 last year. Which of the following statements if FALSE?
The total cost curve will be the same this year as last year.
Which of the following is an assumption of the theory of oligopoly?
There are barriers to entry, Firms produce and sell either homogeneous or differentiated products.
Which of the following is an assumption of the theory of monopoly?
There are extremely high barriers to entry.
Which of the following is true about the relationship between price and quantity supplied?
There is usually a direct relationship
If the percentage change in quantity demanded is equal to the percentage change in price, demand is __________ .
Unit elastic
When a market has huge swings on a daily basis, it is described as
Volatile
Why do you want to know how markets cycle?
What day of the week to sell your product, What season you should sell, Whether the market is going to go up or down
The point where Marginal Costs + Marginal Revenue is
Where profits are at a maximum
On a supply-and-demand diagram, equilibrium is found __________ .
Where the demand and supply curves intersect
On the production function graph the MC=MR, what does this tell the producer?
Where the losses will be the least, Where change in cost and change in revenue are the same, Where the profits are the greatest
Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?
Wilson previously worked as an accountant, earning $3000 a month
Elements of the past several agriculture government programs have tried to reduce the influence that the program would have on
World markets
