Economic Principles Related to Business Management

Explicit

A cost that is incurred when an actual monetary payment is made is a(n) __________ cost

Purchase a put option

A farmer who is willing to pay a set dollar amount to establish floor or base price to be received would do what

Cannot be changed as output changes in the short run

A fixed input is an input whose quantity ___________

A good for which the demand rises as income rises

A normal good is ____________

Output responses to an input

An agriculture produce learns what from the production function

Rightward shift in the demand curve

An increase in the number of buyers in an area will result in a ____________

Sunk

An unrecoverable cost that should be disregarded in any current or future decision is also called a(n) ______ cost

Demand

Any time a consumer will take more only at lower prices is called ____________

$16,000

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?

A surplus

At a price above equilibrium price, there is _________

No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same.

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?

Exists only in the short run / is usually greater at lower levels of output than at higher levels

Average fixed cost

Fixed

Costs that do not change with output are called _______ costs

The sum of explicit and implicit costs

Economic profit is the difference between total revenue and __________

World markets

Elements of the past several agriculture government programs have tried to reduce the influence that the program have on _____________

The talent of organizing the use of land, labor and capital, among other things

Entrepreneurship is ___________________

Wilson previously worked as an accountant, earning $3000 a month

Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?

An inferior good

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 ___________

Equal to the sum of implicit and explicit costs

If a firm earns a normal profit, then it has generated revenues ______________

A normal good

If an increase in income results in an increase in the demand for chicken, then chicken is _________

Price will decrease and quantity will increase

If demand remains unchanged, and supply increases, shifts to the right, then

Perfectly inelastic

If quantity demanded is completely unresponsive to changes in price, demand is:

2.25

If quantity demanded rises by 90 percent as price falls by 40 percent, the coefficient of price elasticity of demand equals _____________

Decrease in price

If the industry level supply curve shifts right, what result is most likely

Unit Elastic

If the percentage change in quantity demanded is equal to the percentage change in price, demand is __________

Income inelastic

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 __________

Equal to; remains constant

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 __________

Make corn and wheat prices higher on the world market

If the value of the dollar increases in value related to other currencies, it will impact U.S. corn and wheat prices in what way?

Buyers and sellers of the product know everything that there is to know about the product

In the theory of perfect competition:

The ability to collect accurate data

It is impossible to be competitive in the complex commodity marketplace without ___________

Resistance

On a chart, a line that connects all the high points as the markets move higher forms a trend line. When projected out, it forms points of __________

where the demand and supply curves intersect

On a supply-and-demand diagram, equilibrium is found

The point where losses will be the least, where the marginal cost = marginal return, the point where the profits are the greatest (ALL OF THE ABOVE)

On the Production Function graph, the MC=MR tells the producer _____________

Where the losses will be the least, where changes in cost and change in revenue are the same, where are the profits are the greatest (ALL OF THE ABOVE)

On the production function graph, the marginal cost = marginal revenue, what does this tell the producer

People substitute relatively lower-priced goods for relatively higher-priced goods

One major reason for the law of demand is that _____________

Price

Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in _______________

Seasonal

Price movement across months within the year is _________ variability

Demand shifts/Supply Shifts

Price movements over time occur because of _______

0.26

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?

Determine how much to produce

Primary purpose of the production function

Some agricultural markets / the soft drink market

Real-world markets that approximate the four assumptions of the theory of perfect competition include ___________

Direct Marketing

Selling through a farmers' market or roadside market is known as _________

Decreases

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 ________

Implicit

The cost of resources used in production for which no actual monetary payment is made is a(n) ___________ cost

Derived Demand

The demand for a product at the farm level is a(n) ____________

Marketing margin

The difference between retail value and the farm value is _________

Accounting profit

The difference between total revenue and explicit costs

Discovery

The dynamic process of searching for the equilibrium or market-clearing prices is called _______________

The lower its price elasticity of demand

The fewer substitutes for a good, _________

Inversely related, ceteris paribus

The law of demand states that price and quantity demanded are

Directly related, ceteris paribus

The law of supply states that price and quantity supplied are __________

Margin

The middlemen in the marketing system operate on

Profits will be the greatest

The point on a production function graph where marginal cost equals marginal revenue is where

Where profits are at a maximum

The point where Marginal Costs = Marginal Revenue is ____________

Equilibrium

The price where demand and supply intersect is known as _____________

Demand

The relationship between quantity PURCHASED and price is known as _______________

Supply Curve

The relationship between quantity SUPPLIED and price is known as ____________

Supply and Demand

The two most important driving factors that influence the market price are __________

The tobacco farms' supply curve would shift leftward, since it would now cost more to produce each level of output

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?

False

True or False: In the short run, all inputs are fixed inputs

True

True or False: In the short run, changes in output can only be brought about by a change in the quantity of variable inputs

False

True or False: Money must change hands before a cost can be incurred

False

True or False: if price rises and total revenue falls: cross elasticity is negative, price elasticity of demand is less than 1, income elasticity of demand is positive

Form, time, place (ALL OF THE ABOVE)

Utility means satisfaction; products have what type of utility?

How much to produce

What can an agriculture producer determine from the Production Function

The change in the cost by adding another unit of input

What does marginal cost measure

The amount of variable input to use

What does stage two in production function graph determine?

How output responds to inputs

What does the Production Function indicate for an agricultural producer

The decision making stage

What is Stage 2 of the Production Function

The higher the price, the higher the quantity supplied will be

What is the Law of Supply

There is usually.a direct relationship

What is true about the relationship between price and quantity supplied

A change in the good's own price

What will NOT shift a supply curve

an entrepreneur

When 3M created the Post-It Note, they were acting as ________

Volatile

When a market has huge swings on a daily basis, it is described as _________

Competitive

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 __________

Condition in which people's wants outstrip the limited resources available to satisfy those wants

When economists speak of scarcity, they are referring to the __________________

Each firm produces and sells a differentiated product

Which of the following is NOT an assumption of the theory of perfect competition

Government

Which of the following is NOT one of the categories of resources: labor, capital, government, entrepreneurship

Demand

Which of the following terms describes this situation: Quantity taken will increase only if the price comes down

Consumer

Who is King in the market place

To see what day of the week to sell your product, what season you should sell, and whether the market is going to go up or down (ALL OF THE ABOVE)

Why do you want to know how markets cycle