Agricultural Economics Flashcards
study of how households and firms make decisions and how they interact in markets.
Microeconomics
comes from Greek work oikonomos, means one who manages a households
Economy
visual model of the economy that shows how dollars flow through markets among households and firms
Circular flow diagram
refers to the value of the best forgone opportunity
Opportunity Cost
this is reflected by the production possibilities frontier (PPF). It shows, for each output of one good, the max. amount of the other good that can be produced using all available resources. The frontier displays a trade off, more of one commodity imploes less of the other.
Production Possibilities
claims that attempts ro describe the wold as it is
Positive statements
claims that attempts to prescribe how the world should be
Normative statements
ability to produce a good using fewer inputs than another producer
Absolute Advantage
whenever must be given up to obtain some item
Opportunity cost
ability to produce a good at a lower opportunity cost than another producer
Comparative Advantage
amount of a good that buyers are willing and able to purchase
law quality demanded
the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises
law of demand
a table that shoes the relationship between the pricd of a good and the quantity demanded
demand schedule
graph of tje relationship between the price of a good and the quantity demanded
demand curve
ang cjange that rises tje quality that buyers wish to purchase at any given price shifts tje demand curve to tje right, any change that lowers tje quantity that buyers wosh to purchase at any given price shiftd the demand curve to the left
Shift in the demand curve
when a fall in the price of the one good reduces the demand for another good, the two goods.
substitute
a good for which, other things beong equal, an increase in income leads to an increasd in demand
normal good
a good foe which, other things being equal, an increase in income leads to a decrease in demand
Inferior good
two good which an increase in the price of one leads to an increasd in the demand for the other
substitutes
two goods for which an increase in the price of one leads to a decrease in the demand for tje other
complements
Price increase causes to reduce the value of the consumers income
income effect
the amount of a good that sellers are willing and able to sell
Quantity supplied
the clain that other things being equal, the quantity supplied of a good risds when the price of the good rises
law of supply
The advantage in tje production of a product enjoyed by one country over another when it produces the product at a lower cost
comparative Advantage
branch of economics that deals the economy as a whole
macroeconomics
Calculates the GDP by summing all expenditure on final goods and services
Expenditure Approach
The market value of all final good and services that country’s resource produce per unit of time regardless where the output is produced
GDP ( Gross Domestic Products)
if net invome from abroad is positive the GNP is
greater than / more than GDP
composed of saving plus consumption
disposal income
a situation in which the market price has reached the levwl at which quantity supplied equals quantity supplied
Equilibrium
prices balances quantity suppleand quantity demanded
Equilibrium price
quantity supplied and the quantity demanded at tje equilibrium price
Equilibrium Quantity
situation in which quantity suppied is greater than quantity demanded
Surplus
situation in which quantity demanded is greater yhan quantity supplied
Shortage
The prolonged and deep recession
depression
Increase in the overall price level
inflation
Period of continuous risng
sustained inflation
protect producer
floor price
protect the consumer
ceiling price
A curve showing tje relationship of unemployment rate and inflation rate
Philips curve
Price elasticity of demand is always negative because
demand changes with price
cost of fee using others money
interest
when elasticity of demand is zero
perfectly in elastic
A type of interest where the interest in the preceding periods earn another interest in the succeeding periods
compounded interest
The meaning of the word “economics” is most closely associated with the word
scarce
As you add equal units of a variable input to a fixed input, the marginal or additional product diminishes even if total product may increase
law of diminishing returns
The objective of a national consumer is to
*
Buy as much of each income allows of the cheapest articles
Avoid purchasing the most expensive commodities
Secure the highest level of satisfaction from his money income
Spread his expenditures over as many products as possible
A change in demand or supply
*
Is caused by a change in price
Is presented by a movement from one point to another on the demand or supply curve
Is caused by a change in any of the determinants of demand or supply other than price and is presented by a shift of the entire demand or supply curve
None of the above
Given a combination of increase in consumers’ income and a decrease in price factors of production the result will be
*
Such that the direction of changes in price and quantity will be uncertain
Higher price , and a lower quantity level
A lower equilibrium price and a higher equilibrium quantity
A lower price and a higher quantity level
he cost that firm incurs in purchasing or hiring any factor of production is referred to as
* explicit cost implicit cost variable cost fixed cost
An increase in price will lead to a lower quantity demanded because:
*
Suppliers will supply only the smaller amount
Some individuals purchase more of the good
Individuals cut back their purchases of the good
A and B
One reason that the quantity demanded of a good tends to rise as its price falls is:
*
The decrease in price shifts the demand curve upward
People feel a bit richer and increase their demand for the good
Demand has to increase to restore equilibrium after a price fall
At lower price suppliers are willing to supply more
The quantity of coffee bought in the market is likely to increase when:
*
The price of tea increases
The price of coffee increases
Coffee is linked to cancer by new research
The general income level of the population drops
Studies revealed that margarine is an inferior good. Therefore, an increase income will result in:
* An increase in demand for margarine A shift to the left of the demand curve tor margarine A shortage of margarine An increase in the supply of margarine
The production function is a technical law which:
*
Relates peso inputs to peso outputs
Indicates the best way to combine factors to produce any given output
Indicates the best output to produce
Relates physical outputs to physical inputs
iminishing returns is observed as a firm increases production by adding variable inputs to at least one fixed input because:
*
The ability or quality of the variable inputs hired decrease as more are hired
The firm must lower the price of its product when it produces more units of output
The per unit cost it must pay for variable input increases as more inputs are hired
As more variable inputs are hired, the amount of fixed inputs per variable input they have to work with deceases
A deflationary gap ran be eliminated by: * Decreasing investment Decreasing government spending Decreasing taxes Decreasing autonomous consumption
The bulk of Philippine government expenditures is accounted for by: * Maintenance and other operating expenses Debt service Personal services Capital outlay
By open market operations we mean the actions of the government to:
*
Increase or decrease government expenditures
Increase or decrease taxes
Buy and sell government bonds
Buy and sell investment goods and services
Which of the following is consistent with a tight monetary policy? * Low interest rates High reserve requirements An increase in money supply Subsidized interest rates to borrowers
