1. 2009-2013 State Farm Management Non-Math Multiple Choice 2009-2013 State Non-Math Test Bank

2. 3. If the Chicago Board of Trade website indicates today's open for the July corn futures contract was 372'6, what price is this? A. $372.6 per ton B. $372.6 per metric ton C. $3.726 per bushel D. $3.7275 per bushel D 2009-2013 State Non-Math Test Bank

3. 7. You are having a good business year and it looks as if taxable income is going to be a lot more than it was last year. Which of the following steps would be the best tax management before the end of the tax year? A. Buy $20,000 of feeders B. Postpone buying the $45,000 tractor until next year C. Buy $15,000 worth of fertilizer for the next crop year D. Sell 5,000 bushels of corn right now E. Put up a $15,000 pole barn this year C 2009-2013 State Non-Math Test Bank

4. 9. A farmer who buys feeder pigs could use the options market to reduce his price risk by A. buying a hog Put option. B. selling a hog Put option. C. buying a hog Call option. D. selling a hog Call option. E. All of the above A 2009-2013 State Non-Math Test Bank

5. 14. The demand for food is usually considered an inelastic demand. This implies that for a given percentage change in price, A. the percentage change in quantity demanded is less. B. the percentage change in quantity demanded is greater. C. the percentage change in quantity supplied is less. D. the percentage change in quantity supplied is more. E. None of the above A 2009-2013 State Non-Math Test Bank

6. 15. The demand for an item with many possible substitutes is _________ than the demand for an item with few substitutes. A. more elastic B. less elastic C. less D. more E. None of the above A 2009-2013 State Non-Math Test Bank

7. 16. The rate of return to equity will be highest when A. the interest rate on borrowed funds is less than the rate of return to assets. B. the interest rate on borrowed funds is equal to the rate of return to assets. C. the interest rate on borrowed funds is greater than the rate of return to assets. D. equity is 50% of total assets. E. None of the above A 2009-2013 State Non-Math Test Bank

8. 17. Which of the following statements regarding equity is not true? A. Equity = net worth B. Equity = total assets minus total liabilities C. Equity can be less than zero. D. Equity cannot be greater than total assets. E. Equity must always be less than total liabilities. E 2009-2013 State Non-Math Test Bank

9. 18. If the supply of a good is inelastic, a 10% change in the price of the good would produce a change in the quantity supplied of A. 10%. B. more than 10%. C. less than 10%. D. 0%. E. None of the above C 2009-2013 State Non-Math Test Bank

10. 19. The total consumer demand and producer supply of leechynuts were equal to 1 million nuts when the price was $1 per nut last year. This year the price is $1.25. Which of the following statements is true? A. More than 1 million leechynuts will be supplied. B. Less than 1 million leechynuts will be supplied. C. More than 1 million leechynuts will be demanded. D. Less than 1 million leechynuts will be demanded. E. Not enough information given to determine quantity supplied or demanded. E 2009-2013 State Non-Math Test Bank

11. 20. You are driving down a Missouri county road, exercising resonable care, when you run into a stray hog standing on the road. You suffer car damages of $3,500 and the hog (valued at $120) is dead. A. The hog owner is presumed to be negligent. B. You will have to prove the hog owner to have been negligent. C. You will have to pay the hog farmer for his hog. D. You can collect double damages if you can prove the hog owner failed to maintain lawful fences. E. None of the above A 2009-2013 State Non-Math Test Bank

12. 23. For income tax purposes, depreciation charges are A. deducted from the total tax liability. B. added to investment credit. C. deducted from operating income. D. deducted from capital sales. E. None of the above C 2009-2013 State Non-Math Test Bank

13. 25. Return to management is net cash farm income A. minus debt payments. B. minus the value of unpaid labor, depreciation, interest on equity capital, and net inventory changes. C. minus value of operator's labor and interest on debt payments. D. minus the interest on equity capital, depreciation, and adjustments for inventory changes. E. None of the above B 2009-2013 State Non-Math Test Bank

14. 28. Return to operator's labor and management is net farm income A. minus debt payments. B. minus the value of operator's labor, depreciation, interest on equity capital, and debt payments. C. minus the value of operator's labor and interest on debt payments. D. minus the interest on equity capital. E. plus interest paid. D 2009-2013 State Non-Math Test Bank

15. 31. The effect of appreciation in an asset's value, such as an increase in land value A. will be accounted for by a larger cash income value in the cash flow statement. B. will be accounted for by smaller added expense figures in the cash flow statement because depreciation would not be subtracted. C. will be accounted for by smaller cash expense value in the cash flow statement. D. is not shown on the cash flow statement. D 2009-2013 State Non-Math Test Bank

16. 32. Inflation means A. a dollar will buy more in the future than it will buy today. B. the prices at which the interest rate will equal the inflation ratio. C. a farmer's profit margin will increase over time due to higher prices. D. a dollar will buy less in the future than it will buy today. D 2009-2013 State Non-Math Test Bank

17. 35. Accrued interest on a balance sheet refers to A. interest that is past due. B. interest that has accumulated since the last loan payment. C. interest on short-term debt. D. interest forgiven by the lender. E. None of the above B 2009-2013 State Non-Math Test Bank

18. 36. A livestock producer wishing to use the futures market to hedge the price of cattle he anticipates selling in the future would initially A. buy futures contracts expecting to sell the contracts when he sells his cattle. B. buy futures contracts expecting to buy more contracts when he sells his cattle. C. sell futures contracts expecting to buy them back when he sells his cattle. D. sell futures contracts expecting to sell more contracts when he sells his cattle. C 2009-2013 State Non-Math Test Bank

19. 38. Capital used in a farmer's beef breeding herd could be invested in stocks, bonds, land, or some other asset. This illustrates the principal of A. marginal cost. B. fixed cost. C. opportunity cost. D. variable cost. E. alternative cost. C 2009-2013 State Non-Math Test Bank

20. 41. The law of supply states that A. as a product price increases, a larger quantity will be consumed. B. as a product price increases, a smaller quantity will be consumed. C. as product price increases, a smaller quantity will be supplied. D. as product price decreases, a smaller quantity will be supplied. E. None of the above D 2009-2013 State Non-Math Test Bank

21. 45. The Universal Soil Loss Equation estimates soil erosion in tons per acre per year = R (rainfall factor) x K (soil erodibility factor) x LS (combination of slope percentage and slope length) x C (crop management factor) x P (conservation practice factor). The P factor for contour farming is 0.5. This indicates A. Contour farming causes 0.5 tons of soil loss per acre per year. B. Contour farming increases soil loss by 50% per acre per year. C. Contour farming reduces soil loss by 50% per acre per year. D. Contour farming would have no impact on the Universal Soil Loss Equation estimate. E. Contour farming would reduce yields by 50% per acre per year. C 2009-2013 State Non-Math Test Bank

22. 46. A deduction that allows an owner or operator to account for the reduction of a product's reserves is called A. depreciation. B. depletion. C. amortization. D. investment credit. E. None of these B 2009-2013 State Non-Math Test Bank

23. 49. Understating the amount of debt on a net worth statement results in A. a smaller net worth figure than should be. B. lower interest costs. C. a smaller debt-to-equity ratio. D. None of the above C 2009-2013 State Non-Math Test Bank

24. 50. Which of the following can influence the value of land? A. Its productivity potential B. Location C. Interest rates D. Inflation rates E. All of the above E 2009-2013 State Non-Math Test Bank

25. 5.The two primary methods of describing the size and location of farmland are rectangular survey and A. angle and distance. B. differential elevation. C. border calibration. D. metes and bounds. E. None of the above D. 2009-2013 State Non-Math Test Bank

26. . 6. How many acres are in a quarter section of land? A. 40 acres B. 160 acres C. 640 acres D. 1,000 acres E. None of the above B 2009-2013 State Non-Math Test Bank

27. . 8. Which of the following farm items is not eligible to be depreciated? A. A machine shed constructed by the farmer B. A used tractor purchased from a neighbor C. A new pickup D. Raised heifers added to the breeding herd E. None of the above D 2009-2013 State Non-Math Test Bank

28. . 9. Advantages of incorporating the farm business include all of the following except A. limiting personal liability. B. better income tax treatment for fringe benefits. C. simpler record keeping. D. facilitates multiple owners. E. None of the above.C 2009-2013 State Non-Math Test Bank

29. 10. A decrease in the value of the U.S. dollar relative to the currency of other countries should result in A. more costly imports. B. less costly imports. C. decreased exports. D. no effect on imports or exports. E. None of the above A. 2009-2013 State Non-Math Test Bank

30. . 11. Carrie Cattlefeeder buys feeder cattle and corn and sells fed cattle.If she wants to be totally hedged in the futures market for her price risk in the coming year, she would be A. "short" fed cattle, "long" feeder cattle, and "long" corn. B. "short" fed cattle, "short" feeder cattle, and "short" corn. C. "short" fed cattle, "short" feeder cattle, and "long" corn. D. "long" fed cattle, "short" feeder cattle, and "short" corn. E. None of the above A. 2009-2013 State Non-Math Test Bank

31. 12. The best indication that a farmer is making financial progress year-to-year is A. an increase in the value of total assets on the balance sheet. B. a decrease in the value of total liabilities on the balance sheet. C. an increase in net worth on the balance sheet. D. an increase in total cash flow on the cash flow statement. E. None of the above C. 2009-2013 State Non-Math Test Bank

32. . 14. For an amortized loan, the amount of interest in the first payment will be A. more than the amount of the principal. B. less than the amount of the principal. C. equal to the amount of the principal. D. dependent on the length of the loan. E. None of the above E. 2009-2013 State Non-Math Test Bank

33. . 22. A farmer's net returns per acre for establishing alfalfa the first year are negative, but he makes money for each of the next four years before the alfalfa has to be reestablished. In preparing an enterprise budget to compare alfalfa with other crops A. he should use only the returns after the alfalfa has been established. B. he should decrease the annual returns after the alfalfa has been established by the cost of establishing the crop. C. he should decrease the annual returns after the alfalfa has been established by 20% of the establishment year losses to cover the cost of establishment. D. he should amortize the establishment year losses over the remaining four years. E. None of the above D 2009-2013 State Non-Math Test Bank

34. . 23. Which is heavier, a bushel of shelled corn or a bushel of soybeans? A. Shelled corn B. Soybeans C. They weigh the same. D. Depends on whether measured in pounds or kilograms. E. None of the above B 2009-2013 State Non-Math Test Bank

35. 24. If the interest rate is 10%, what is the present value of a dollar to be received by a producer two years from now? A. $0.826 B. $0.900 C. $1.100 D. $1.210 E. None of the above A. 2009-2013 State Non-Math Test Bank

36. 25. When an increase in production of one enterprise causes a reduction in the production of another enterprise, the two enterprises are said to be A. independent. B. complementary. C. supplementry. D. competitive. E. None of the above D. 2009-2013 State Non-Math Test Bank

37. . 27. A grain farmer who normally stores his soybeans at a local elevator has decided to use the options market to create a synthetic storage. To do so he will sell his beans at harvest and A. buy a put option. B. sell a put option. C. buy a call option. D. sell a call option. C. 2009-2013 State Non-Math Test Bank

38. . 29. The primary goal of income tax management for a farm operator is to A. minimize income taxes paid. B. maximize the taxable income. C. minimize the taxable income. D. maximize the farm's after tax income. E. None of the above D. 2009-2013 State Non-Math Test Bank

39. 30. The demand curve shows the relationship between A. consumer tastes and the quantity demanded. B. price and the quantity demanded. C. price and production costs. D. money income and quantity demanded. E. None of the above B. 2009-2013 State Non-Math Test Bank

40. . 35. The best measure of a firm's ability to make a short-term loan payment is A. debt/asset ratio. B. solvency ratio. C. current ratio. D. leverage ratio. E. net capital ratio. C. 2009-2013 State Non-Math Test Bank

41. 36. If the U.S. wheat industry has an inelastic demand curve, a decrease in the amount of wheat supplied to the market would A. have no effect on total revenues for wheat producers. B. increase the total revenues for wheat producers. C. decrease the total revenues for wheat producers. D. cause a sharp increase in the demand for wheat. E. None of the above B 2009-2013 State Non-Math Test Bank

42. 37. A trader with a long position in the futures market A. profits when prices go down, loses when prices go up. B. profits when prices neither go up nor down. C. profits when prices go up, loses when prices go down. D. loses when prices neither go up nor down. E. cannot lose money. C 2009-2013 State Non-Math Test Bank

43. 38. Livestock, stored grain, land, and personal property used to secure a loan are A.collateral. B.inventory. C.liabilities. D.net worth. E.Illiquid. A 2009-2013 State Non-Math Test Bank

44. 39. Which of the following is not a supply shifter for farm products? A.weather B.new technology C.government programs D.consumer income E.None of the above D 2009-2013 State Non-Math Test Bank

45. 41. Cooperatives pay patronage refunds according to A.one man, one vote. B.size of farm. C.amount of business done by patron. D.total assets. E.All of the above C 2009-2013 State Non-Math Test Bank

46. 42. For a trader who is short in the market, a standing order to buy should the futures price move above a certain level is called a A.stop order. B.limit order. C.permanent block. D.hedge. E.None of the above A 2009-2013 State Non-Math Test Bank

47. . 44. Interest rates go up, causing Jack's annual interest expense to increase from $12,000 to $14,000. This will cause his rate of return on equity to A.increase. B.decrease. C.not change. D.Any of the above E.None of the above B 2009-2013 State Non-Math Test Bank

48. . 45. Crop prices decline, causing Marcia's sales income to decline while leaving her cash operating expenses unchanged. This will cause her capital turnover to A.increase. B.decrease. C.not change. D.Any of the above E.None of the above B 2009-2013 State Non-Math Test Bank

49. 46. The ability of larger firms to be more profitable than smaller firms in the same industry is an example of A.diminishing returns. B.imperfect competition. C.inelastic supply. D.economies of size. E.None of the above D 2009-2013 State Non-Math Test Bank

50. . 8. A acre equals A.0.40 hectares B.0.74 hectares C.2.47 hectares D.5.05 hectares E.None of the above A 2009-2013 State Non-Math Test Bank

51. . 9. A farmer who wants a real rate of return on his investment of 5% will use what discount rate if he anticipates inflation of 2% per year? A.2% B.3% C.5% D.7% E.None of the above D 2009-2013 State Non-Math Test Bank

52. . 10. An increase in the rate of inflation, everything else equal, will have what impact on the present value of a future stream of income? A.No impact B.Increase the present value C.Decrease the present value D.Cannot tell E.None of the above C 2009-2013 State Non-Math Test Bank

53. 11. The process of finding the present value of a dollar to be received in the future is known as A.compounding. B.discounting. C.forwarding. D.ratio analysis. E.None of the above B 2009-2013 State Non-Math Test Bank

54. . 12. Fred Brown raises corn and feeds it to his hogs. This type of business structure is an example of A.vertical integration. B.horizontal integration. C.supply company. D.marketing cooperative. E.None of the above A 2009-2013 State Non-Math Test Bank

55. 13. If the price of a commodity is too low, the demand will be greater than the supply resulting in a A.surplus. B.boycott. C.monopoly. D.shortage. E.None of the above D 2009-2013 State Non-Math Test Bank

56. . 14. A farmer placed too high a value on his land in his closing inventory while all other records were accurate. Net working capital in his record summary is A.too high. B.too low. C.not affected. D.fixed. E.None of the above C 2009-2013 State Non-Math Test Bank

57. 15. When the size of the soybean harvest exceeds locally available farm and elevator storage, what happens to the basis? A.Basis narrows. B.Basis widens. C.Basis goes out of existence. D.Basis is usually the same all year long. E.None of the above B 2009-2013 State Non-Math Test Bank

58. . 16. The money you must deposit with a broker to insure performance in order to trade in the futures market is called A.basis. B. margin. C. commission. D. spread. E. None of the above B 2009-2013 State Non-Math Test Bank

59. 17. The short-run supply curve for a firm is identical to A. average variable cost. B. average fixed cost. C. average total cost. D. marginal cost. E. None of the above. D 2009-2013 State Non-Math Test Bank

60. . 18. A farm business with declining average total costs has A.increasing returns to size. B.decreasing returns to size. C.constant returns to size. D.decreasing demand. E.None of the above A 2009-2013 State Non-Math Test Bank

61. . 19. Which of the following is not a type bankruptcy? A.Chapter 7 B.Chapter 11 C.Chapter 12 D.Chapter 13 E.All are bankruptcy chapters E 2009-2013 State Non-Math Test Bank

62. 20. The maximum amount that a wife can inherit from her husband without owing any federal estate tax is A.$10,000. B.$600,000. C.$600,000 less excess gift tax. D.unlimited. E.None of the above D 2009-2013 State Non-Math Test Bank

63. 21. Many farmers do a considerable amount of custom work. Their reason for doing this is A.to spread the fixed cost of their equipment over more acres. B.to earn a return to under-utilized labor. C.to help out their neighbors. D.to supplement on-farm income. E.All of the above E 2009-2013 State Non-Math Test Bank

64. 22. Using comparable sales for the purpose of appraising farmland is called the A. inventory approach to appraising. B. earnings approach to appraising. C. market approach to appraising. D. cost approach to appraising. E. None of the above. C 2009-2013 State Non-Math Test Bank

65. 23. Other things equal, the value of land will be greatest to the farmer who has the A.longest planning horizon. B.shortest planning horizon. C.highest discount rate. D.lowest discount rate. E.None of the above D 2009-2013 State Non-Math Test Bank

66. 25. The farm return to land, labor, and capital for a year would be found on A.the balance sheet. B.the cash flow budget. C.the income statement. D.a partial budget. E. None of the above C 2009-2013 State Non-Math Test Bank

67. 26. Which of the following is considered Schedule F farm income? A.Cull breeding stock B.Crop sales C.Sales of farm equipment D.Sale of land E.All of the abovE B 2009-2013 State Non-Math Test Bank

68. 27. For the rules of depreciation, which of the following is an example of "listed property"? A.A home B.A raised cow C.A greenhouse D.A passenger car E.None of the above. D 2009-2013 State Non-Math Test Bank

69. 28. An LLC (Limited Liability Company) is usually A.taxed like a corporation. B.taxed like a partnership. C.not for profit and therefore not taxed. D.illegal in Missouri. E.None of the above. B 2009-2013 State Non-Math Test Bank

70. . 29. The main difference between cash and accrual accounting is that accrual accounting includes A.charge for unpaid family labor. B.depreciation. C.an adjustment for changes in inventory. D.sales of assets. E.None of the above C 2009-2013 State Non-Math Test Bank

71. . 30. A farmer should issue an IRS Form 1099 for which of the following? A.$750 paid to a neighbor for hay. B.$500 paid to a neighbor for custom work. C.$1500 paid to a neighbor for a bull. D.$650 paid to a neighbor for land rent. E.All of the above D 2009-2013 State Non-Math Test Bank

72. . 31. When required, you must send an IRS Form 1099-MISC to IRS before A.December 31. B.January 31. C.March 1. D.April 15. E.90 days after payment. C 2009-2013 State Non-Math Test Bank

73. . 32. The IRS form used to calculate self-employment tax is A.Schedule D. B.Form 4797. C.Form 4562. D.Schedule SE E.None of the above D 2009-2013 State Non-Math Test Bank

74. . 33. The USDA agency that administers the federal crop insurance program is the A.Farm Service Agency B.Risk Management Agency C.Farm Crop Insurance Agency D.Rural Development Agency E.None of the above B 2009-2013 State Non-Math Test Bank

75. . 34. Which is not a policy plan for multi-peril crop insurance? A.Revenue Protection B.Yield Protection C.Management Protection D.Revenue Protection with harvest price exclusion E.None of the above C 2009-2013 State Non-Math Test Bank

76. 35. On a crop insurance policy, APH stands for A.Adjusted Protection History B.Accumulated Price History C.Approximate Policy Hierarchy D.Actual Production History E.None of the above. D 2009-2013 State Non-Math Test Bank

77. . 36. What type of insurance protects the farmer from lawsuits if he/she is responsible for personal injury or property damage to another person? A.Life insurance B.Property insurance C.Accident insurance D.Liability insurance E.None of the above D 2009-2013 State Non-Math Test Bank

78. 37. Even though corn prices are at record levels, corn farmers still receive from USDA A.direct payments. B.loan deficiency payments. C.counter-cyclical payments. D.acreage protection payments. E.None of the above A 2009-2013 State Non-Math Test Bank

79. 39. Which of the following should not affect a farmer's decision to store his crop? A.Interest rates B.Shrinkage during storage C.Anticipated price in the future D.What he paid for his grain bin E.None of the above. D 2009-2013 State Non-Math Test Bank

80. 44. A farmer who prefers to produce all his crop under contract would be considered A.risk averse. B.risk neutral. C.risk loving. D.risk indifferent. E.None of the above A 2009-2013 State Non-Math Test Bank

81. . 45. The returns for a farmer who produces his crop under a contract as compared to a farmer who produces none of his crop under contract would be A.more variable. B.less variable. C.always higher. D.always lower. E.None of the above B 2009-2013 State Non-Math Test Bank

82. 46. For an amortized loan, the amount of interest in the first payment will be A.more than the amount of the principal. B.less than the amount of the principal. C.equal to the amount of the principal. D.dependent on the length of the loan. E.None of the above E 2009-2013 State Non-Math Test Bank

83. . 47. Crop prices increase, causing Marcia's sales income to increase while leaving her cash operating expenses unchanged. This will cause her capital turnover to A.increase. B.decrease. C.not change. D.Any of the above E.None of the above A 2009-2013 State Non-Math Test Bank

84. 1.On a crop enterprise budget that does not include any charges for land, which number corresponds to the maximum amount that a farmer could pay in cash rent per acre in the short run? A. Total operating costs B. Returns above total operating costs C. Total costs D. Returns above total costs E. None of the above B. 2009-2013 State Non-Math Test Bank

85. 2. On a crop enterprise budget that does not include any charges for land, which number corresponds to the maximum amount that a farmer could pay in cash rent per acre in the long run? A. Total operating costs B. Returns above total operating costs C. Total costs D. Returns above total costs E. None of the above D 2009-2013 State Non-Math Test Bank

86. 9. The cost of producing one additional unit of output is called A. opportunity cost. B. substitution cost. C. average cost. D. marginal cost. E. None of the above D 2009-2013 State Non-Math Test Bank

87. 12. USDA has an FSA office in most rural counties. FSA stands for A. Farm Service Agency. B. Field System Administration. C. Financial Survey Agency. D. Federal Statistical Analysis. E. None of the above. A 2009-2013 State Non-Math Test Bank

88. 15. Collectively, amino acids are usually called A. starch. B. protein. C. fats. D. plasma. E. None of the above B 2009-2013 State Non-Math Test Bank

89. 16. A 2-wheel drive tractor typically requires more horsepower to pull the same implement as a 4-wheel drive tractor because A. 2-wheel drive tractors have more slippage. B. 2-wheel drive tractors weigh more. C. 2-wheel drive tractors are often older. D. 2-wheel drive tractors calculate horsepower differently. E. None of the above A 2009-2013 State Non-Math Test Bank

90. 17. A farmer is solvent if A. he has sufficient current assets to cover current debts. B. he has sufficient equity to cover debts. C. he has sufficient assets to cover all debts. D. he can pay all debts with all equity. E. All of the above C 2009-2013 State Non-Math Test Bank

91. 18. A Subchapter S corporation can have no more than A. 10 shareholders. B. 35 shareholders. C. 75 shareholders. D. 100 shareholders. E. There is no limit on number of shareholders. D 2009-2013 State Non-Math Test Bank

92. 20. Purchase of a call option on corn means the buyer A. is required to sell a corn futures contract at a set price. B. may sell, but is not required to sell, a corn futures contract at a set price. C. may buy, but is not required to buy, a corn futures contract at a set price. D. is required to buy a corn futures contract at a set price. E. None of the above C 2009-2013 State Non-Math Test Bank

93. 21. The disadvantage of leasing a tractor as compared to purchasing is that leasing A. increases your income tax. B. decreases your depreciation and capital expensing. C. releases capital for other uses. D. reduces output per worker. E. costs less in the long run. B 2009-2013 State Non-Math Test Bank

94. 23. The capital gains taxes that would be due should a farmer sell his land is an example of a A. current liability. B. long-term liability. C. deductible expense. D. contingent liability. E. None of the above D 2009-2013 State Non-Math Test Bank

95. 24. Which USDA agency’s primary activity is conducting surveys to determine farm production, prices, income, and expenses? A. Agricultural Research Service (ARS) B. National Agricultural Statistics Service (NASS) C. Agricultural Marketing Service (AMS) D. Economic Research Service (ERS) E. None of the above B 2009-2013 State Non-Math Test Bank

96. 25. Which of the following statements regarding accrued interest is most nearly true? A. Beginning accrued interest will always be less than ending accrued interest. B. Beginning accrued interest will always be greater than ending accrued interest. C. Accrued interest pertains only to short-term debt. D. Accrued interest pertains only to intermediate and long-term debt. E. Accrued interest is not a cash expense until it is paid. E 2009-2013 State Non-Math Test Bank

97. 26. Diminishing marginal returns to a factor of production are most likely to occur when A. one factor is increased and all others are fixed. B. one factor is fixed and all others are increased in equal proportion. C. all factors are increased in equal portion. D. One factor is decreased and all others are fixed. E. None of the above A 2009-2013 State Non-Math Test Bank

98. 32. A vicious cold spell in the late spring has wiped out the buds on the peach trees grown in Georgia, a major peach producing state. How will this freeze impact the price received for peaches by Maryland peach producers? A. No effect - Georgia is too far away to have any impact on Maryland. B. Will lower the price because the demand for peaches will be lower. C. Because of the reduced supply, prices for peaches in Maryland will tend to move upward. D. No effect - Maryland does not grow enough peaches to have any impact on prices. E. None of the above C 2009-2013 State Non-Math Test Bank

99. 35. A written agreement by which an owner of property transfers title to someone for the benefit of beneficiaries is a A. trust. B. partnership. C. corporation. D. sole proprietorship. E. None of the above A 2009-2013 State Non-Math Test Bank

100. 37. The price of widgets changes from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. From this we can conclude that A. the demand for widgets is elastic. B. the demand for widgets is inelastic. C. the demand for widgets is of unit elasticity. D. the demand for widgets has declined. E. None of the above A 2009-2013 State Non-Math Test Bank

101. 42. Frank's beginning balance sheet showed $40,000 in corn stored at the local elevator. Which of these would not explain his ending balance sheet entry of $20,000 corn stored at the local elevator? A. He sold some corn during the year. B. The price of corn was lower at the end of the year. C. He had less corn stored at the end of the year than the beginning. D. All of these could explain the decrease. E. None of these would explain the decrease.. D 2009-2013 State Non-Math Test Bank

102. 45. An increase in total costs of $20 per acre will increase the breakeven yield by how many units if the price the price is $5 per unit. A. 4 units B. 10 units C. 20 units D. 100 units E. None of the above.A 2009-2013 State Non-Math Test Bank

103. 2. The objective of determining repayment capacity of a farm or ranch business should be A. to determine the net return to land, labor, and management for the business. B. to determine how much debt the business can safely handle. C. to determine the rate of return to farmer’s equity capital. D. to project the net worth of the business for the end of the year. E. None of the above B 2009-2013 State Non-Math Test Bank

104. 7. Livestock, stored grain, land, and personal property used to secure a loan are A. collateral. B. inventory. C. liability. D. net worth. E. None of the above A 2009-2013 State Non-Math Test Bank

105. 8. The main drawback of an adjustable rate mortgage is that A. the initial interest rate is usually higher than for other types of loans. B. the interest is not deductible for farm businesses. C. it is only available for loans under $100,000. D. the interest rate can increase. E. None of the above D 2009-2013 State Non-Math Test Bank

106. 12. Which of the following will always produce an increase in the gross margin for a corn producer? A. An increase in the price of corn and a decrease in corn yield. B. A decrease in the price of corn and an increase in corn yield. C. A decrease in the price of nitrogen fertilizer and an increase in corn yield. D. An increase in the price of nitrogen fertilizer and an increase in corn yield. E. None of the above C 2009-2013 State Non-Math Test Bank

107. 15. The price of a product changes from $100 to $75 and, as a result, the quantity demanded increased from 50 to 60 units. From this we can conclude that A. the demand is elastic. B. the demand is inelastic. C. the demand is of unit elasticity. D. the demand has decreased. E. None of the above B 2009-2013 State Non-Math Test Bank

108. 16. Corn and grain sorghum are substitutes for each other in many livestock feed rations. Assuming they are substitutes, a decrease in the supply of corn would cause the demand for grain sorghum to A. shift to the left. B. shift to the right. C. decrease. D. remain unchanged. E. none of the above B 2009-2013 State Non-Math Test Bank

109. 20. Purchase of a call option on corn means the buyer A. is required to sell a corn futures contract at a set price. B. may sell, but is not required to sell, a corn futures contract at a set price. C. may buy, but is not required to buy, a corn futures contract at a set price. D. is required to buy a corn futures contract at a set price. E. None of the above C 2009-2013 State Non-Math Test Bank

110. 21. A farmer with a long position in the futures market A. profits when prices go down, loses when prices go up. B. profits when prices neither go up nor down. C. profits when prices go up, loses when prices go down. D. loses when prices neither go up nor down. C 2009-2013 State Non-Math Test Bank

111. 23. A farmer placed too low a value on his feeder pigs in his closing inventory while all other records were accurate. The current ratio in his record summary is A. too high. B. too low. C. not affected. D. fixed B 2009-2013 State Non-Math Test Bank

112. 25. Ownership costs of a tractor include all but which of the following? A. Depreciation on the tractor B. Insurance for the tractor C. Taxes on the tractor D. Fuel for the tractor E. None of the above D 2009-2013 State Non-Math Test Bank

113. 26. In which of the following market structures would consumers be expected to pay the highest price? A. Pure competition B. Monopolistic competition C. Oligopoly D. Monopoly E. Monopsony D 2009-2013 State Non-Math Test Bank

114. 27. A cattle feeder, wishing to use futures markets to hedge the price of slaughter cattle, would at the time of his cattle purchase A. buy futures contracts expecting to sell the contracts when selling cattle. B. sell futures contracts expecting to sell more contracts when selling cattle. C. sell futures contracts expecting to buy contracts when selling cattle. D. buy futures contracts expecting to buy more contracts when selling cattle. E. None of the above C 2009-2013 State Non-Math Test Bank

115. 28. An increase in the value of the U.S. dollar relative to the currency of other countries should result in A. more costly imports. B. less costly imports. C. increased exports. D. no effect on imports or exports. E. None of the above B 2009-2013 State Non-Math Test Bank

116. 30. The demand curve shows the relationship between A. consumer tastes and the quantity demanded. B. price and the quantity demanded. C. price and production costs. D. money income and quantity demanded. E. None of the above B 2009-2013 State Non-Math Test Bank

117. 31. A projection of all income and expenses associated with growing an acre of a particular crop would be called A. a partial budget. B. an enterprise budget. C. a whole farm budget. D. an income statement. E. a balance sheet. B 2009-2013 State Non-Math Test Bank

118. 32. The asset turnover ratio equals A. net farm income divided by total assets. B. net farm income plus depreciation divided by total assets. C. value of farm production divided by total assets. D. value of farm production divided by net worth. E. None of the above C 2009-2013 State Non-Math Test Bank

119. 34. The Social Security wage base A. does not apply when calculating Medicare taxes. B. is the same for Medicare as for Social Security. C. is doubled when calculating self-employment income. D. is half as much for self-employed individuals. E. None of the above A 2009-2013 State Non-Math Test Bank

120. 35. In a livestock enterprise budget prepared on July 1, home-grown feed A. should not be included as a cost. B. should be included, valued at its net market price. C. should be included valued at its cost of production. D. should be valued at past year’s inventory value. E. None of the above B 2009-2013 State Non-Math Test Bank

121. 37. There is not a CME Group corn futures contract for which of these months? A. May B. July C. September D. December E. None of the above E 2009-2013 State Non-Math Test Bank

122. 38. In analysis of a farm, what would you do if a cash flow projection indicated that there would be more expense than income in a certain month? A. Terminate the enterprise causing the cash flow problem that month. B. Use savings, delay expenses, move up sales, or borrow money. C. Change from cash to accrual accounting method. D. Change depreciation methods. E. None of the above B 2009-2013 State Non-Math Test Bank

123. 39. A CME Group feeder cattle futures contract covers how many pounds of feeder cattle? A. 30,000 B. 40,000 C. 50,000 D. 60,000 E. None of the above C 2009-2013 State Non-Math Test Bank

124. 41. Which of the following would not appear on a cash flow statement? A. Interest paid on a loan for a tractor B. Principal paid on a loan for a tractor C. Depreciation expense on a tractor D. Rental payment received from the neighbor who used the tractor. E. None of the above C 2009-2013 State Non-Math Test Bank

125. 42. The USDA agency with primary responsibility for soil and water conservation is A. NASS. B. ERS. C. NRCS. E. FSA. E. None of the above C 2009-2013 State Non-Math Test Bank

126. 43. A price ceiling set below the equilibrium price creates A. shortages. B. black markets. C. surpluses. D. A and B. E. None of the above D 2009-2013 State Non-Math Test Bank

127. 44. The income that could have been received if the input had been used in its most profitable alternative use is A. alternative income. B. marginal revenue. C. not important in agriculture. D. opportunity cost. E. None of the above D 2009-2013 State Non-Math Test Bank

128. 45. The largest trading center for livestock futures is located in A. Chicago, Illinois. B. Sioux City, Iowa. C. Omaha, Nebraska. D. Oklahoma City, Oklahoma. E. Kansas City, Missouri. A 2009-2013 State Non-Math Test Bank

129. 46. If a farmer is to carry a hedge through to completion, the farmer A. will always make a profit. B. must always deliver the hedged commodity at the local elevator. C. must be prepared to meet all margin calls. D. the basis becomes a major consideration. E. None of the above C 2009-2013 State Non-Math Test Bank

130. 47. Salvage values do not need to be considered when comparing a cash outright purchase to A. a credit purchase. B. a financial lease. C. custom hire. D. All of these E. None of these A 2009-2013 State Non-Math Test Bank

131. 48. Operating costs do not need to be considered when comparing custom hire to A. a cash outright purchase. B. a financial lease. C. a credit purchase. D. All of these E. None of these E 2009-2013 State Non-Math Test Bank

132. 49. The value of operator labor needs to be considered when comparing a credit purchase to A. a cash outright purchase. B. a financial lease. C. custom hire. D. All of these E. None of these C 2009-2013 State Non-Math Test Bank

133. 50. Maintenance and repair costs need to be considered when comparing custom hire to A. an outright cash purchase. B. a financial lease. C. a credit purchase. D. All of these E. None of these D 2009-2013 State Non-Math Test Bank