AG Marketing Exam #1

Compared to fresh or relatively unprocessed retail products, greater processing of agricultural commodities is generally indicative of A. Higher four firm concentration ratios (CR4's) B. Greater product differentiation and more advertising C. A smaller farmer share of the retail price and a larger farm retail price margin D. All of the above

D

Concerning current cash prices of agricultural commodities... A. Their normal levels are most affected by the positions of their long-run supply curves B. The large variations from year to year in hog prices are usually caused by large swings in quantities of hogs marketed C. Large shifts in demand are more likely for important export commodities than for others D. All the above

D

Four firm concentration ratios: (CR4's) A. Indicate market share of four largest firms in that market B. Tend to be higher for highly processed products, like breakfast cereals, than fresh meats and produce C. Are greater than 50% for all food industries, suggesting that most agribusiness is not competitive D. Both A and B

D

T/F Micro marketing is more complex for the manager of a firm in perfect competition rather than in oligopolistic competition.

F

T/F Storage, transportation, and financing are facilitating functions.

F

T/F The exchange of functions of marketing are selling and transportation.

F

T/F The power to be a price maker guarantees the power to make economic profits.

F

T/F Own price demand elasticity may vary within the limits of plus or minus 1.

F KNOW ELASTICITY <1 ETC....

T/F Low prices usually "cure" low prices within a single production period.

F

In economic terms, why is the consumer demand curve often considered to be highly elastic?

-Because consumers have many choices due to SUBSTITUTES!

In economic terms, why is the farm-level supply curve often considered to be highly inelastic?

-Because of the BIOLOGICAL LAG FACTOR, Farmers are limited in how quickly supply can be adjusted in responses to changes in price.

What is the meaning of utility and how is it related to the consumer demand curve?

-SATISFACTION OR JOY obtained by consuming a good. Related to the LAW OF DEMAND, which SAYS WE DEMAND MORE (LESS) AT LOW (HIGH) PRICES, because WE ADJUST OUR LEVEL OF SATISFACTION AS PRICES CHANGE.

What are the 3 key questions the field of economics seeks to answer?

-WHAT to produce, HOW to produce it, WHO to produce it for?

Competition among a few firms, with possibly some product differentiation could be A. Oligopoly or Oligopsony B. Monopoly or Monopsony C. Monopolistic Competition D. None of the above

A

T/F In terms of the market models covered in chapter 2, the fast food restaurants industry most closely resembles perfect competition.

F

The price for nonperishable crops typically follows a seasonal pattern of A. Low harvest prices followed by increasing prices throughout the marketing year B. High harvest prices followed by decreasing prices throughout the marketing year C. Prices vary dramatically every harvest, because the commodity easily spoils D. Prices stay the same throughout the year, since we don't have to consume all of the commodity at harvest

A

When considering agricultural prices... A. The degree of commodity perishability has a major influence on short-term prices B. Storable crops that are relatively more expensive to store, such as apples, will typically exhibit less seasonal price variation than those with lower storage costs, such as wheat C. The seasonal variation of retail fresh milk process is more than that of pork D. The beef cattle cycle is 3-5 years in length

A

Where are food processors generally located? A. Where wages are lowest B. In production areas if finished products can be shipped more cheaply than raw materials C. In consumption areas if processing greatly reduces the weight of salable products D. All of the above

B

Which of following is true about the largest food manufacturers in this country? A. They are all extremely specialized in making a few products B. They are often conglomerate firms producing many different food and even non-food products C. They are so big that they are considered monopolies D. They are mostly foreign owned

B

Economies of size A. Refers to decreasing cost per unit as more is produced B. Contribute to growing specialization of production in agriculture C. Both A and B D. None of the above

C

The law of demand states which of the following? A. Food spending changes in the opposite direction as income changes B. When demand rises, supply falls C. A larger quantity is demanded at a lower price than at a higher price, all other things held constant D. Quantity response to price is elastic

C

Wheat marketing margins may rise in the same season as farm wheat prices fall because of which of the following? A. The monopolistic grain traders decide to gouge the farmer B. Farmers are price taker C. A big wheat crop can depress wheat prices while raising the demand for wheat marketing services D. None of the above

C

Which of following are true of perfect competition? A. Many competitors, as entry and exit are easy B. Homogenous product C. It closely resembles the price-taking aspect of much of production agriculture D. All of the above

D

Which of the below is true of inferior goods? A. Examples would be eating less ramen noodles or rice if you made more money B. They have an income elasticity of demand less than zero C. They have an income elasticity of demand greater than one D. Both a and b

D

Which of the following are likely associated? A. Huge increases in per capita consumption over a 20 year period and increases in demand B. Small year to year changes in the consumption and in the production of perishable commodities C. Large increases over time in per capita income and small increases over time in per capita spending on some foods D. All the above

D

T/F Agribusiness handling commodities generally engage in less price competition than those merchandising differentiated products because firms handling commodities aren't able to do much about fixing prices.

F

T/F Cause of change in consumption is always a shift in demand curve.

F

T/F Farmer's micro marketing programs are typically much stronger than the procurement programs of their buyers.

F

T/F If the price of a farm commodity such as lettuce falls abruptly, you can be confident that lettuce production costs have fallen.

F

Market with many sellers of (somewhat) differential products is

Monopolistic competition

T/F A price taker is one who has little over establishing an asking price.

T

T/F Agribusiness are generally the control center of the food and fiber system.

T

T/F Convenience yield refers to the storage of commodities, even though the market is not signaling storage opportunities.

T

T/F Engles law states that as income increases, the proportion spent on food decreases.

T

T/F One can infer that large price-cross elasticities among commodities indicate that their relative prices influence relative levels of consumption over time.

T

T/F One of important elements of market structure is the degree (if any) of product differentiation.

T

T/F Perfection competition involves many buyers and sellers of homogeneous commodity.

T

T/F The higher CR4 ratios tend to be in grocery products, such as breakfast cereals, rather than in fresh meats and produce.

T

T/F The macro view of marketing is comprehensive view of nearly all that occurs to a farm commodity between the farm fate and final consumer.

T

T/F The percentage of disposable income spent on food in the U.S. is one of the lowest of any nation in the world.

T

T/F Whereas seasonality refers to price patterns within a year, price cycles refer to patterns that may occur over longer periods.

T