Ag Econ Exam 1
The marginal rate of substitution between points C and D is:
-5/3
The own-price elasticity of demand for shrimp between points A and B is:
1.857
According to the chart below, which bundle is preferred?
Bundle B 2 pop 6 wing
The output produced in bushels and the prices of this output ($/bushel) over the last three years for Seth Johnson, a farmer in Amarillo, Texas, are as follows:Let the base year be 2011. What is the output index for 2010?
0.933
What branch of economics is concerned with the activities of U.S. agricultural producers?
Positive economics
The output produced in bushels and the prices of this output ($/bushel) over the last three years for Seth Johnson, a farmer in Amarillo, Texas, are as follows:Let the base year be 2011. What is the price index for 2012?
1.207
The marginal utility associated with drinking coffee is:
10
Which of the following is not true?
U.S. farms tend to be specialized rather than diversified in that about half of the U.S. farms produce just one commodity.
The retail value of a gallon of milk (fat free) is $4.19. Dairy farmers receive roughly $1.64 for this gallon of milk. What is the dairy farmer's share of the retail food dollar?
39%
The budget line does not depend on:
the preferences for the respective goods.
When market price is $5 per pound, the consumer surplus is:
$125.
Hill's Pet Nutrition, Inc. of Topeka, Kansas has three alternatives for manufacturing pet foods:Alternative 1: Manufacture cat food alone and obtain a profit of $20 million.Alternative 2: Manufacture dog food alone and obtain a profit of $30 million.Alternative 3: Manufacture both dog food and cat food and obtain a profit of $45 million.The opportunity cost of the firm is:
$30 million.
Suppose your nominal income in 1990 was $24,000. Suppose too that the consumer price index for 2012 was 1.5, and the base year for this index was 1990. How much nominal income would you need in 2012 in order to match the spending power of your $24,000 in 1990?
36,000
What is the value of X in the table below?
1,200
What is the value of Z in the table below?
1,500
What is the value of Y in the table below?
1,700
The value of any index for the base period is
1.
For a representative consumer, 8 tacos and 2 hamburgers generate the same utility as 4 tacos and 4 hamburgers. How many tacos must the consumer give up in order to get one more hamburger?
-2
Suppose the Engel curve for a particular commodity is given by:What is the income elasticity for this particular product?
0.365
data for Wilson's Lamb Slaughtering Plant are given below:Let the base year be 1.0 in 1998. What is the output index for 1999? 1.33
0.75
Suppose that a retailer sells 500 six-packs of Dr. Pepper per day at $3.50/six-pack. Also, suppose that the cross-price elasticity between Dr. Pepper and Pepsi is 0.6. If the retailer lowers the price of Pepsi from $4.00 to $3.60/six-pack, what is the percentage change in the price of Pepsi?
10% decrease
Suppose that Bill Toney, a tobacco farmer near Roanoke, Virginia has assets of $50 million and liabilities of $38 million. What is the equity for this tobacco farmer?
12 million
The food and fiber industry today accounts for roughly what percent of GDP in the United States?
12 to 15 percent
An agribusiness firm may undertake three alternatives: buy cane sugar and manufacture various sugars and sweets, making a profit of $12 million; buy corn and produce ethanol, making a profit of $16 million; or buy wheat and produce breads, rolls, and pastries, making a profit of $13 million. The opportunity cost associated with these three choices is:
13 million
Assume that the price of sorghum grain is $6.00 per bushel. When we apply 30 tons of fertilizer on our 20 acres of sorghum grain, the total yield is 1000 bushels. When we apply 50 tons of fertilizer, the total yield is 1500 bushels. What is the marginal value product per ton of fertilizer?
150/ton
Assume that for Jim Swain, a corn producer from Illinois, the only source of farm income is from the production of corn. Swain produced 150,000 bushels of corn in 2012, receiving $5 per bushel. Assuming this producer had production expenses of $300,000, and assuming the Consumer Price Index (CPI) for 2012 was 2.50, what was his real farm income for 2012?
180,000
The output produced in bushels and the price of this output ($/bushel) for Robert Holden over the last three years are as follows:Assume that the only source of income for Robert Holden is from the production of this output. The best year in terms of real income for Robert Holden was:
1998.
What is the income elasticity of demand for pizza between points A and B?
2.5
The output produced in bushels and the prices of this output ($/bushel) over the last three years for Seth Johnson, a farmer in Amarillo, Texas, are as follows:Let the base year be 2011. Relative to 2011, the price of this commodity in 2012 was higher by _______ percent.
20.69
What is the value of W in the table below?
200
This question pertains to the following table that gives the output produced (in bushels) and price of corn received ($/bushel) for Farmer Smith over the period 2008 to 2010. Assume that the only source of income for Farmer Smith is from the production of corn. Also assume that all production costs are zero.
2009
Suppose that Robin budgets $12/week for Wings 'N' Suds. The price of buffalo wings is $0.50 while the price of Coca-Cola is $1.50. What is the maximum number of buffalo wings that Robin may buy?
24
Individual demand schedules for three customers from the local H-E-B store in the purchase of ice cream are given below:What is the quantity demanded of ice cream at a price of $1.60 assuming that the only consumers in this market are customers A, B, and C?
25
If the expenditure allotted to buy Subway and Chick-Fil-A sandwiches equals $60, what is the price of a Chick-Fil-A sandwich?
3
The retail value of one dozen eggs is $2.89. Farmers receive $1.04 for this dozen of eggs. What is the farmer's share of the retail dollar?
36%
Given the indifference curves in this graph, which combination of wings and hamburgers yields the highest level of satisfaction?
5 wings, 5 hamburgers
Suppose that Cheddars is currently selling 500 Chicken and Oriental salads for $5. Suppose that the own-price elasticity for this product is -0.8. If Cheddars wishes to lower the price to $4, you predict that, all other factors held constant, the number of Chicken and Oriental salads sold at this price will be:
580.
The output produced in bushels and the prices of this output ($/bushel) over the last three years for Seth Johnson, a farmer in Amarillo, Texas, are as follows:Let the base year be 2011. Relative to 2011, output for 2010 was lower by ______ percent.
6.67
Suppose that Robin budgets $12/week for Wings 'N' Suds. The price of buffalo wings is $0.50 while the price of Coca-Cola is $1.50.Suppose that Robin budgets $12/week for Wings 'N' Suds. What is the maximum number of Coca-Cola drinks that Robin may buy?
8
Suppose that the own-price elasticity for Ragu spaghetti sauce is -1.25. Which of the following is (are) true?
A 4% increase in price leads to a 5% decrease in quantity demanded.
Changes in taste and preference refer to changes in:
All of the above
Scarce resources like land, labor, and capital can be categorized as:
All of the above
Which of the following statement(s) is (are) true?
All of the above
Which of the following statements is (are) true?
All of the above
Suppose that Robin budgets $12/week for Wings 'N' Suds. The price of buffalo wings is $0.50 while the price of Coca-Cola is $1.50. Which of the following are True?
Both (a) and (c)
Suppose that the own-price elasticity for yogurt is -0.6. Which of the following statement(s) is (are) true?
Both (a) and (c)
Which of the following statement(s) is (are) true?
Both (a) and (c)
The demand curve for a product shifts to the right. Which of the following statement(s) is (are) a plausible explanation(s) for this situation?
Both (b) and (c)
The movement of point A to point B (or vice versa) represents:
Both (b) and (c)
Which of the following statement(s) is (are) false?
Both (b) and (c)
According to the chart below, which bundle is least preferred, assuming total utility is the product of the quantity of popcorn and the quantity of sodas?
Bundle D
When the market price increases to $8 per pound, which of the following statements is true?
Consumers are worse off by $105.
Which of the following combinations of goods is in line with a cross-price elasticity equal to zero?
Kentucky fried chicken and Dove deodorant
Which of the following is true?
If the cross-price elasticity of demand between two goods is negative, then the two goods are complements.
The marginal utility of a good (e.g. bananas) declines with increases in the consumption of that good. This phenomenon is referred to as the:
Law of Diminishing Marginal Utility.
According to this diagram, Monterey Jack cheese is what kind of good?
Luxury
The U.S. economy represents what kind on econometric system?
Mixed
Which of the following is not true?
None of the above (that is, all statements are true)
Congress commissioned a study to determine what the poverty level or minimum level for subsistence should be for the U.S. population. What branch of economics does this represent?
Normative economics
Given the diagram below, what can you conclude?
Not enough information
According to the following chart,when total utility is equal to 24, how many bottles of Dr. Pepper will this consumer give up in order to get one more wing?
One-half
______________________ refers to the implicit cost associated with the next best alternative in a set of choices available to decision-makers.
Opportunity cost
Suppose that the Beltrand family owns a farm near San Angelo, Texas. Three options exist for how to best use the farm:Option 1: Raise lambs and earn a profit of $425,000. Production expenses are $200,000.Option 2: Raise cattle and earn a profit of $475,000. Production expenses are $400,000.Option 3: Grow cotton and earn a profit of $600,000. Production expenses are $300,000.Which option should the Beltrand family undertake and what is the opportunity cost in this decision?
Option 3, $475,000
What branch of economics is concerned with the effects of nutrition labeling on the dietary quality of consumers (i.e. what-if types of questions)?
Positive economics
Which of the following statements is false?
Regardless of the commodity, the farmer always receives 20 cents of the dollar spent in food.
Most resources are best suited for a particular use. For example, climate and other conditions in Florida allow resources to be used in orange production in lieu of wheat or potato production. What economic concept deals with this issue?
Specialization
Which of the following statement(s) is (are) false?
The U.S. economy represents a purely capitalistic system.
The clockwise rotation in this diagram may be best explained as:
The price of beef rose.
Consider the diagram to the right. At point C, which of the following statement(s) is (are) true?
The marginal rate of substitution is -3/4.
Which of the following statement(s) is (are) false?
The slope of any linear demand curve is the own-price elasticity.
Which of the following would provide the best evidence that a commodity is being produced under conditions of perfect competition?
The supply curve is perfectly inelastic.
The American Medical Association reported that the consumption of green peas would lower the likelihood of breast cancer. Which of the following diagrams best illustrates the impact of this medical announcement? (Note: D0 is the original relationship and D1 is the new relationship.)
a
The shift in the budget line in the graph to the right is due to:
a fall in income
The following graph depicts:
a perfectly elastic demand curve.
Which of the following is true?
all of the above
Assume that for a given consumer, the marginal utility of cheap food is 100 and the price of cheap food is $40. Also, assume that the marginal utility of environmental quality is 200 and the price of environmental quality is $100. This consumer:
buy more cheap food
Which of the following diagrams best illustrates the immediate impact of a food safety scare due to Salmonella infections of chicken? (Note: D0 is the original relationship and D1 is the new relationship.)
c demand drops
Which of the graphs is consistent with the economic impacts of a food recall or food safety scare (e.g. salmonella in contaminated poultry or E. coli in contaminated beef)?
d the demand would go down
According to this diagram, the income elasticity of demand for salmon is:
equal to 0.5.
The Latin phrase, ceteris paribus, means:
everything else the same, or holding all other factors constant.
Economic reasoning that is true for one individual but not for society as a whole is referred to as:
fallacy of composition.
The term "real" as opposed to "nominal" means that economists are making adjustments for
inflation.
Which of the following is the best example of an inferior good?
kool-aid
The major component of all activities once a crop, livestock, or fiber product leaves the farm gate is:
labor
If the own-price elasticity of demand is -1.25, in order for the manufacturer of Ragu to increase total revenue, at least in the short run, it would be advisable to:
lower the price of Ragu.
Recently, the price of gasoline dropped to just under $3.50/gallon. Economic analysts currently are focusing on questions concerning the likely impacts of this price decrease on the demand for gasoline. The branch of economics that deals with these questions is:
positive economics.
Suppose the index of prices received by farmers for 2000 was 1.02 and the base year of this index was 1995. Then:
relative to 1995, farm prices were 2% higher in 2000.
Suppose the index of prices received by farmers for 2012 was 1.70 and the base year of this index was 1996. Then:
relative to 1996, prices received by farmers were 70% higher in 2012.
The own-price elasticity of demand for oranges at the farm level is -0.3. Suppose that an unexpected freeze occurs resulting in a 6% drop in orange production. Orange prices will:
rise by 0%
The own-price elasticity for cherries at the farm level is -0.60. Because of the recent freeze in Washington, cherry production will fall by 12 percent. Cherry prices are likely to:
rise by 20%.
Assume that for a given consumer, the marginal utility of 7-Up is 160 and the price of 7-Up is $2. Also, assume that the marginal utility of Coca-Cola is 200 and the price of Coca-Cola is $3. This consumer:
should buy more 7-Up
Assume that for a given consumer, the marginal utility of wine is 100 and the price of wine is $60. Also, assume that the marginal utility of lobster is 200 and the price of lobster is $100. This consumer:
should buy more lobster.
The stage of production where the total physical product curve begins to decline corresponds to:
stage 3
The marginal physical product of labor is:
the amount of extra output that is produced when one extra worker is added and other factors of production are held constant.
In a recent article in USA Today, the price of gasoline rose over the past year from $3.50 to $4.00, a price hike of about 14.29 percent. Gasoline consumption over the past year declined by 10 percent. So, on the basis of this article, we can conclude that:
the own-price elasticity for gasoline is nearly -0.70
Recently, salmonella outbreaks occurred due to the contamination of the processing of peanuts. Given this information, it is likely that:
the price of peanut products would fall and the quantity of peanut products produced would fall.
Suppose that a successful advertising and promotion campaign occurs for apples. Given this successful campaign, it is likely that:
the quantity of apples sold will rise and the price of apples will rise.