Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AGEC 289 > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

Which of the following is NOT one of the three primary determinants of market structure?

a. Barriers to entry or exit
b. Product differentiation
c. Degree of Institutional involvement
d. Number and relative size of buyers and sellers

A

c. Degree of Institutional involvement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

All of the following would be considered third degree price discrimination except:

a. Booking a motel room early to ensure a discount
b. Grandparents getting a “Seniors Discount” at an amusement park
c. Getting a bulk-quantity discount as a member of a warehouse club
d. Scheduling a weekend stayover to get a discount on airline tickets

A

c. Getting a bulk-quantity discount as a member of a warehouse club

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A market characterized by a situation where certain buyers and sellers have some control over price leading to inefficiencies in terms of costs to consumers is best defined as:

a. Perfect Competition
b. Imperfect Competition

A

b. Imperfect Competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Which market structure shown below would be expected to minimize consumer surplus?

a. Monopoly
b. Oligopoly
c. Perfectly Competitive

A

a. Monopoly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Which market structure shown below is expected to provide the lowest price and highest quantity?

a. Monopoly
b. Oligopoly
c. Perfectly Competitive

A

c. Perfectly Competitive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Which of the following is the primary determinant for ensuring long-run economic profit for a monopoly?

a. Differentiated product
b. Significant barriers to entry
c. Ability to be a “price-maker”
d. Efficiency of the operations

A

b. Significant barriers to entry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Which of the following is the primary reason an oligopoly is not a pure price maker?

a. Strategy
b. Interdependence
c. Product Differentiation

A

b. Interdependence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Of the following, which is the best example of a “price-taker”?

a. A GMO corn breeder
b. A U.S. wheat producer
c. A fast food franchise
d. A brand-name gas station

A

b. A U.S. wheat producer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A kinked-demand curve illustrates the reason monopoly markets tend to see more stable prices and why competitors maximize total revenue by following a competitor’s price decrease.

a. True
b. False

A

b. False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Market share of an industry or product is more important than size of a firm in determining market power.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A thin market is one which has few buyers, few sellers and limited number of transactions, making the price discovery process more challenging.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

The primary component of a successful price discovery system using formula pricing is:

a. Locating a centralized auction location
b. Buyer and sellers agreeing to adjustment factors for quality
c. Buyer and sellers agreeing on a third-party base price
d. Both B and C

A

d. Both B and C

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Aside from assigning a skilled negotiator, the primary challenge to a successful collective bargaining pricing system is ensuring that participants stay within the group and abide by the group pricing decisions.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Which of the following is not a primary consideration when adopting a price discovery system?

a. Ensuring equitable returns to participants
b. Minimizing costs to both buyers and sellers
c. Providing accurate price signals and quality
d. Limiting the number of buyers and sellers

A

d. Limiting the number of buyers and sellers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Market prices in an administered system tend to be more distorted and less efficient than true market prices.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

In 2008, the value of total U.S. agricultural production not covered by contracting was:

a. 20%
b. 30%
c. 40%
d. 60%

A

d. 60%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Benefits of vertical integration include all of the following except:

a. Supply chain efficiency
b. Capturing additional margins
c. A means of addressing “holdup” in a market
d. Allowing farmers to make independent input decisions

A

d. Allowing farmers to make independent input decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Using a traditional spot cash market is a relatively low-risk means to pricing a commodity.

a. True
b. False

A

b. False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Holdup is defined as the risk of a producer in a limited market with a specialized or perishable commodity being forced to sell at a low price from a single buyer.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

All of the following are advantages to contracting except:

a. Reducing income risk
b. Assuring a market for a commodity
c. Eliminating default risk of a single buyer
d. Ensuring and rewarding for quality

A

c. Eliminating default risk of a single buyer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Agreements between a producer and a buyer, made prior to the completion of a production cycle, which detail the terms under which ownership of a commodity will be transferred from the farm are best defined as:

a. Hedging contracts
b. Agricultural contracts
c. Production contracts
d. Spot or cash market contracts

A

b. Agricultural contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Which of the following industries has become the largest user of production contracts?

a. Wheat markets
b. Dairy markets
c. Cattle markets
d. Poultry markets

A

d. Poultry markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Usage of agricultural contracts tends to increase with each of the following factors except:

a. Size of the farm
b. Debt level of the farm
c. Net worth of the farm
d. Farms with specialized equipment

A

c. Net worth of the farm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Crop markets tend to utilize marketing contracts while poultry and hog markets utilize production contracts.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Grain and cattle producers are less likely to contract because of pricing tools available with futures markets.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Risk management in agricultural production primarily entails:

a. Ensuring an output price that covers breakeven cost of production
b. Protecting profitable margins for livestock feeding operations
c. Utilizing fundamental and technical analysis to determine price direction and objectives
d. All the above

A

d. All the above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

The basic balance sheet equation for a storable commodity is:

a. Supply plus Demand equals Ending Stocks
b. Supply minus Demand equals Ending Stocks
c. Stocks plus Imports equals Total Supply
d. Demand minus Supply equals Ending Stocks

A

b. Supply minus Demand equals Ending Stocks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Fundamental analysis looks at supply and demand factors while technical analysis focuses on identifying price targets on charts.

a. True
b. False

A

a. True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

U.S. corn plantings are forecast at 95 mln acres, harvested acreage is forecast to be 90 mln acres and the trendline yield for U.S. corn is 175 bushels per acre. Given these numbers, what is expected U.S. corn production?

a. 15.750 billion bushels
b. 16.625 billion bushels
c. 17.500 billion bushels
d. 18.125 billion bushels

A

a. 15.750 billion bushels

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Given your answer for U.S. corn production above, what would be your expectation for corn prices if yields came in 25% above the trendline yield due to exceptional growing conditions?

a. Lower Prices
b. Higher Prices

A

a. Lower Prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

If fundamental analysis of the beef market shows cattle on feed numbers decreasing, and significantly lower than expected, you would expect beef prices over the next six months to:

a. Increase (go higher)
b. Decrease (go lower)

A

a. Increase (go higher)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Challenges involved with using the cattle on feed report within the pipeline approach to forecasting beef supply is:

a. Only feedlots with 1,000 head or more of placements are reported
b. Measuring the impacts of weather on rate of weight gain and death loss
c. Accounting for the variability of the final carcass weight at slaughter
d. All the above

A

d. All the above

33
Q

Exports for grain and livestock markets are an important consideration in fundamental market analysis.

a. True
b. False

A

a. True

34
Q

Cattle cycles tend to run in durations of 7 to 10 years and indicate whether herd size is expanding or contracting.

a. True
b. False

A

a. True

35
Q

A good methodology for determining price outlook should utilize both fundamental and technical analysis.

a. True
b. False

A

a. True

36
Q

Based on the above chart, if a speculator went long on wheat futures in January and offset the position in early March the result of the trade would be a:

a. Profit
b. Loss

A

a. Profit

37
Q

A speculative trade on a single 5,000 bushel wheat futures contract which was sold at $5.50 per bushel and offset at $5.00 would result in what type of financial outcome for the trader (ignoring commissions):

a. A profit of $2500
b. A loss of $2500
c. A profit of $1000
d. A loss of $1000

A

a. A profit of $2500

38
Q

A hedger trades futures to profit strictly from a change in price while a speculator trades futures to protect a price and ensure a margin for a cash commodity.

a. True
b. False

A

b. False

39
Q

Futures contracts are standardized agreements to buy or sell a commodity in a central market which specify quantity and quality of the commodity and allow for a highly efficient, low-cost method of price discovery.

a. True
b. False

A

a. True

40
Q

Selling feeder cattle through an electronic online auction system broadcasting across the United States.

A

Central Market Auction

41
Q

A wheat producer negotiates directly with a flour milling company for high protein wheat stored on his farm.

A

Individual Negotiation

42
Q

Basing your milk price on Class III dairy futures with an adjustment for components and quality of the milk.

A

Formula Pricing

43
Q

A cooperative negotiates a price for high quality malt barley grown and delivered by members of the cooperative.

A

Collective Bargaining

44
Q

The Bureau of Land Management sets the price per animal unit per month for permits on federal properties.

A

Administered Pricing

45
Q 
Which of the following is NOT one of the three primary determinants of market structure?
A. Barriers to entry or exit
B. Degree of product differentiation
C. Level of government involvement
D. Number of buyers and sellers
A

C. Level of government involvement

46
Q

Which of the following market structures allows for absolute “price making” ability?
A. Perfectly Competitive
B. Monopoly
C. Oligopoly

A

B. Monopoly

47
Q

A monopoly market results in lower quantity supplied and higher prices than a purely competitive market.
A.True
B.False

A

A. True

48
Q

All of the following would be considered third degree price discrimination except:
A. Booking a motel room early to ensure a discount on the rate (time)
B. Grandma and grandpa getting a “seniors” discount at the movie theatre (age)
C. Getting a discount on buying a case-lot of canned soup at the warehouse club (quantity)
D. Booking a weekend stayover to get a discount on airplane tickets (time)

A

C. Getting a discount on buying a case-lot of canned soup at the warehouse club
(quantity)

49
Q

Which of the following is NOT a characteristic of a monopoly?
A. Firm’s demand = market demand
B. Firm controls quantity supplied
C. Differentiated product
D. Provides a higher quantity at a lower price

A

D. Provides a higher quantity at a lower price

50
Q

Price for gas in Moscow has been stable. One firm lowers the gas price $.10 per gallon to get more business. Assuming this market is an oligopoly, what do you expect other firms to do?
A. Increase their Gas Price
B. Decrease their Gas Price

A

B. Decrease their Gas Price

51
Q

Which of the following types of market structure has the greatest overall market power and influence in the food supply chain?
A. Perfectly Competitive
B. Oligopoly
C. Monopoly

A

B. Oligopoly

52
Q

All of the following are a form of collective bargaining except:
A. A grain cooperative negotiating a malt barley contract on behalf of it’s members
B. Negotiating directly with a buyer for the high protein wheat in your farm storage
C. Dairy Farmers of America arranging a price for cheese from milk delivered to the coop
D. Shepard’s Grain locating a regional market to establish a flour price from grain delivered by it’s members

A

B. Negotiating directly with a buyer for the high protein wheat in your farm storage

53
Q 
Which of the following price discovery systems has the highest cost per transaction?
A. Collective Bargaining
B. Individual Negotiation
C. Central Market
D. Formula Pricing
A

B. Individual Negotiation

54
Q

Production contracts pay a fee to a producer for providing a service, marketing contracts pay a market price for providing a commodity.
A. True
B. False

A

A. True

55
Q

Benefits of vertical integration include all of the following except:
A. Addresses “Hold Up” in a market
B. Supply chain efficiency
C. Allows farmer ability to make independent decisions
D. Capturing additional margins

A

C. Allows farmer ability to make independent decisions

56
Q 
The basic balance sheet equation for a storable commodity is:
A. Supply plus Demand = Ending Stocks
B. Supply minus Demand = Ending Stocks
C. Stocks plus Imports = Total Supply
D. Demand minus Supply = Ending Stocks
A

B. Supply minus Demand = Ending Stocks

57
Q

Primary differences between fundamental analysis of cattle versus grain markets include all of the following except:
A. Cattle are a non-storable commodity
B. Cattle analysis uses a pipeline approach rather than a balance sheet approach
C. Cattle demand analysis does not include exports as a component
D. Cattle analysis adjusts supply forecasts to account for missing production information

A

C. Cattle demand analysis does not include exports as a component

58
Q 
The primary factor which allows a monopoly to capture long-term economic profits is:
A. Numerous buyers & sellers
B. Homogenous Product
C. Institutional Involvement
D. Large barriers to entry
A

D. Large barriers to entry

59
Q 
Which market structure provides the highest quantity of product to the consumer at the lowest cost?
A. Monopoly
B. Oligopoly
C. Oligopsonistic
D. Perfectly Competitive
A

D. Perfectly Competitive

60
Q

A kinked-demand curve helps explain why an oligopolist follows a competitor’s price decreases.
A. True
B. False

A

A. True

61
Q 
Which of the following is the best example of an absolute “pricemaker” in a marketplace?
A. A GMO corn breeder
B. A wheat producer
C. A fast-food franchise
D. A brand-name gas station
A

A. A GMO corn breeder

62
Q 
Which of the following is the best example of second-degree price discrimination?
A. Senior discounts at movie
B. Higher insurance rate for teens
C. Discounts for quantity purchases
D. Pricing based on race
A

C. Discounts for quantity purchases

63
Q 
Considerations when adopting a price discovery system include all of the following except:
A. Ensuring equitable returns
B. Minimizing costs
C. Limiting number of participants
D. Accurate price signals & quality
A

C. Limiting number of participants

64
Q 
Which of the following price discovery systems would be expected to provide the lowest cost per transaction?
A. Individual Negotiation
B. Central Market Auction
C. Collective Bargaining
D. Administered Pricing
A

B. Central Market Auction

65
Q 
A negotiator working on behalf of producers which belong to a vegetable growing cooperative would best describe which type of the following price discovery systems?
A. Individual Negotiation
B. Central Market Auction
C. Collective Bargaining
D. Administered Pricing
A

C. Collective Bargaining

66
Q

A market which has many buyers and many sellers is defined as a thin market.
A. True
B. False

A

B. False

67
Q

Crop markets tend to utilize marketing contracts and livestock markets tend to utilize integrated production contracts.
A. True
B. False

A

A. True

68
Q 
Benefits of vertical integration include all of the following except:
A. Supply chain efficiency
B. Capturing additional margin
C. Addressing “holdup” in a market
D. Allowing independent farm decisions
A

D. Allowing independent farm decisions

69
Q

Agricultural contracts are defined as agreements between producers and buyers, made prior to harvest, which detail terms under which ownership of a commodity are transferred from the farm.
A. True
B. False

A

A. True

70
Q

Grain and cattle producers are less likely to utilize contracts because of the availability of pricing alternatives using futures and options markets.
A. True
B. False

A

A. True

71
Q

The basic USDA balance sheet equation for a storable commodity is supply minus demand equals ending stocks.
A. True
B. False

A

A. True

72
Q

If analysis of the beef market shows cattle-on-feed numbers to be significantly higher than expected, your expectation or bias would be for short-term beef prices to:
A. Increase (Bullish)
B. Decrease (Bearish)

A

B. Decrease (Bearish)

73
Q 
An occurrence on a price chart where prices take out both the previous high and low price is best defined as:
A. Trendline
B. Trading Range
C. Reversal
D. Break-out
A

C. Reversal

74
Q 
The result of a speculator going short a single 5000 bushel wheat futures contract at $4.00 per bushel and offsetting the trade at $3.50 would be:
A. A loss of $500
B. A gain of $500
C. A loss of $2500
D. A gain of $2500
A

D. A gain of $2500
Sold at $4.00 bot at $3.50
Gain of $.50 per bushel
5,000 x .50 = + $2500

75
Q 
The result of a speculator going long one 50,000 pound feeder cattlefutures at $140 per cwt and offsetting the trade at $150 per cwt would be:
A. A loss of $5000
B. A gain of $5000
C. A loss of $4000
D. A gain of $4000
A

B. A gain of $5000
Bot @ $140 Sold @ $150
Gain of $10 per cwt
(50,000/100) * 10 = +$5,000

76
Q

Risk management involves determining price outlook by using fundamental analysis to evaluate supply and demand and using technical analysis to identify price targets and objectives; all to protect a profitable price or margin for an agribusiness.
A. True
B. False

A

A. True

77
Q

A futures contract is a standardized agreement which trades in a central market, specifying quantity and quality of a commodity, with the agreement backed by a good faith margin deposit.
A. True
B. False

A

A. True

78
Q

In futures trading, an “offset” is known as the act of a buyer or seller taking the opposite position to close an open trade.
A. True
B. False

A

A. True

79
Q 
A technical tool which connects three price points on a chart showing prices increasing over a period of time is referred to as:
A. Uptrend
B. Trading Range
C. Reversal
D. Break-out
A

A. Uptrend

AGEC 289 (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions