Farm Management 2009 MC Non-Math

2009

11. Marginal revenue and marginal cost are useful concepts in determining the profit maximizing output level. Profit will be at its maximum level A. where marginal revenue is at its maximum level and marginal cost is 0. B. where marginal revenue is 0 and marginal cost is at its maximum. C. where marginal revenue equals marginal cost. D. where marginal revenue is at its minimum and marginal cost is at its maximum. c

12. If both demand and supply increased equally for an agricultural product, what will be the results on the quantity of the product sold and the price received? A. The same quantity will be sold at the same price. B. An increased quantity will be sold at a lower price. C. An increased quantity will be sold at a higher price. D. An increased quantity will be sold at the same price. E. None of the above d

13. When a farmer borrows money to purchase land, he usually must offer the title to the property as security until the debt has been repaid. This credit instrument is commonly referred to as a A. sales contract. B. promissory note. C. mortgage. D. check. E. None of the above c

14. A decline in the value of total farm assets will A. increase the rate of return to equity. B. increase the rate of return to assets. C. increase the capital turnover ratio. D. all of the above. E. None of the above d

15. The increase in wheat yield becomes smaller for each additional 10 pounds of nitrogen fertilizer applied after 30 pounds per acre have been applied. This is an example of A. increasing marginal returns. B. unprofitable use of fertilizer. C. diminishing marginal physical product. D. stage 3 of production. E. None of the above c

16. Which of the following causes a shift in the demand for beef? A. A decrease in cattle numbers B. Increased cost of producing beef C. Increased number of cattle producers D. Increased income of consumers E. All of the above d

17. 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

20. Farmer Brown purchases a new tractor. A record keeping system which records both the addition to equipment and the reduction of cash is called A. income statement. B. dual effect. C. balance sheet. D. double entry. E. None of the above d

21. 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

22. Farmer Johnson has a rate of return on assets of 5% when assets are valued using the cost method, and a rate of return on assets of 7% when the assets are valued using market valuation. This means that the value of assets using the cost method A. is greater than the market valuation. B. is equal to the market valuation. C. is less than the market valuation. D. produces a higher return to farm assets. E. None of the above a

26. Economists use elasticities to relate the percentage change in one variable to the percentage change in another variable. The cross-price elasticity of demand estimates the impact on the demand for a good with respect to the change in the price of another good. A positive cross- price elasticity indicates the two goods are A. substitutes. B. complements. C. inferior. D. luxuries. E. None of the above a

27. The own-price elasticity of demand estimates the impact on the quantity of a good demanded by a change in the price of the good. Normally, one would expect the own-price elasticity of demand to be A. positive. B. negative. C. zero. D. None of the above b

28. The income elasticity of demand estimates the impact of a change in income on the demand for a good. For normal goods, the income elasticity of demand is A. positive. B. negative. C. zero. D. None of the above a

30. How many bushels of corn are in a metric ton? A B C D E. None of the above d

33. 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

37. 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

39. 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

40. If the price of a September Put option is higher today than yesterday, then one would expect that the price of a September futures contract is A. higher today than yesterday. B. lower today than yesterday. C. unchanged from yesterday. D. either up or down. There is no relationship between futures prices and prices of options E. None of the above b