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Ag Econ > Exam #2 (WS 6) > Flashcards

Exam #2 (WS 6) Flashcards

1
Q

The production Possibilities Frontier (curve) for peanuts and soybeans grown in the southern US:

a. Is based on the production function for all soybeans and peanuts grow in the US
b. Is based on the production functions for peanuts and soybeans in the southern states
c. Is based on the prices of soybeans and peanuts
d. None of the above

A

b.

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2
Q

An isorevenue line depicts all combinations of two products:

a. That have the same price
b. With the same marginal rate of substitution
c. That can be sold for the same total revenue
d. None of the other three answers

A

c.

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3
Q

The Production Possibilities Frontier (curve) represents all possible combinations of two products:

a. That can be produced with the same set of resources
b. For which the opportunity costs are equal
c. That are supplementary in relationship
d. That will yield the same total revenues

A

a.

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4
Q

Movement along a Production Possibilities Frontier (curve) are an indication of:

a. The change in efficient production levels
b. None of the other three answers
c. All points of equal marginal rates of substitution
d. Opportunity cost between production and two inputs

A

a.

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5
Q

The Marginal Rate of Product Substitution (MRPS) tells a manager:

a. The amount by which one output must be reduced when another output is increased for a given set of resources
b. The amount by which the opportunity costs of one product will decline with a given set of resources
c. The amount of output possible for all given sets of resources available
d. None of the other three answers

A

a.

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6
Q

To maximize profits for a given level of resources, the firm will:

a. Go to the highest isocost line possible
b. Go to the highest PPF possible
c. Go to the highest isorevenue line possible
d. Go to the highest isoquant possible

A

c.

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7
Q

For the optimal output decisions in the competitive case, the revenue-maximization criterion is based on:

a. The price of inputs
b. The marginal rate of product substitution
c. The Production Possibilities Frontier (curve)
d. The Marginal Rate of Product Substitution (MRPS) and product price ratio

A

d.

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8
Q

For a farm producing two crops and operating on the Production Possibilities Frontier (curve) where revenue is maximized, a reduction in the price of one crop will:

a. Shift the Production Possibilities Frontier (curve) inward
b. Shift the isorevenue line outward
c. Increase the costs of production
d. None of the other answers

A

d.

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9
Q

For all regions of the US that produce both corn and soybeans:

a. The Production Possibilities Frontier (curve) are the same
b. The Marginal Rate of Production Substitution (MRPS) between corn and soybeans is equal
c. None of the other three answers
d. The revenue-maximization points will be identical

A

c.

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10
Q

The PPF is:

a. Concave to the origin
b. Convex to the origin
c. None of the other three answers
d. Of constant slope

A

a.

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11
Q

For a farm producing two crops and operating on the Production Possibilities Frontier (curve) where revenue is maximized, a change in the price of a third output will:

a. Shift the Production Possibilities Frontier (curve) inward
b. Shift the isorevenue line outward
c. None of the other three answers
d. Increase the costs of production

A

c.

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12
Q

The opportunity cost of a resource tells a manager:

a. The amount by which one output must be reduced when another output is increased for a given set of resources
b. The amount by which the fixed costs of one product will decline with a given set of resources
c. The amount of output possible for all the given set of resources available
d. None of the other three answers

A

d.

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13
Q

The isorevenue line is:

a. Concave to the origin
b. Convex to the origin
c. None of the other three answers
d. Of constant slope

A

d.

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14
Q

For all nations that produce both beef and pork:

a. The Production Possibilities Frontier (curve) is the same
b. The marginal rates of product substitution between beef and pork are equal
c. The revenue-maximization points will be identical
d. None of the other three answers

A

c.

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15
Q

In the equation: Y1, Y2 = (./ A, K, L, M)

a. Land is fixed
b. Land is variable
c. Output is fixed
d. Capital is variable

A

a.

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16
Q

Which equation best represents a Production Possibilities Frontier?

a. Y = f( A/ K, L, M)
b. Y = f( A, K/ L, M)
c. Y1, Y2 = f(./ A, K, L, M)
d. Y = f( A, K, L, M)

A

c.

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17
Q

In the graph of a Production Possibilities Frontier, there are:

a. Inputs on both axes
b. Input on the x-axis, and output on the y-axis
c. Outputs on both axes
d. Output on the x-axis, and input on the y-axis

A

c.

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18
Q

A Production Possibilities Frontier is:

a. All combinations of two inputs that produce the same level of output
b. All combinations of two outputs that produce the same level of input
c. All combinations of two inputs that can be purchased at the same cost
d. All combinations of two outputs that can be produced with fixed inputs

A

d.

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19
Q

A Production Possibilities Frontier demonstrates that:

a. a large number of combinations of inputs can produce the same level output
b. a large number of output combinations can be produced with the same level of inputs
c. costs of production remain constant at all levels of output
d. revenues remain constant at all levels of output

A

b.

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20
Q

A point located inside the PPF is:

a. efficient and attainable
b. not efficient, but attainable
c. efficient, but not attainable
d. neither efficient nor attainable

A

b.

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21
Q

The MRPS represents:

a. the physical tradeoff between inputs
b. the physical tradeoff between outputs
c. the economic tradeoff between inputs
d. the economic tradeoff between outputs

A

b.

22
Q

A typical Production Possibilities Frontier is:

a. convex to the origin, reflecting imperfect substitutes for inputs
b. concave to the origin, reflecting imperfect substitutes for inputs
c. convex to the origin, reflecting perfect substitutes for inputs
d. concave to the origin, reflecting perfect substitutes for inputs

A

b.

23
Q

A Production Possibilities Frontier is:

a. the physical production function
b. consumer choices of what to buy
c. scarcity
d. the Law of Diminishing Marginal Utility

A

a.

24
Q

The slope of the Production Possibilities Frontier is:

a. the price ratio
b. the Marginal Rate of Product Substitution (MRPS)
c. the Marginal Rate of Technical Substitution (MRTS)
d. the Law of Diminishing Returns

A

b.

25
Q

In equilibrium:

a. the slope of the PPF is equal to the slope of the isorevenue line
b. the MRPS = price ratio
c. the revenue maximizing combinations of outputs produced
d. all of the other three answers

A

d.

26
Q

If the price of the output on the horizontal axis (Y1) increases, then

a. the slope of the isorevenue line will become steeper
b. the slope of the isorevenue line will become less steep
c. the slope of the PPF will become steeper
d. the slope of the PPF will become less steep

A

a.

27
Q

An isorevenue line:

a. shows combinations of two outputs that produce the same level of revenue
b. the slope is equal to the negative price ratio of the two outputs
c. the slope measures the rate of economic substitution between the two outputs
d. all of the other three answers

A

a.

28
Q

To determine the revenue-maximizing combination of outputs to produce, a manager must know:

a. the MRPS and the input price ratio
b. the Marginal Rate of Product Substitution (MRPS) and the PPF
c. the Marginal Rate of Product Substitution (MRPS) and the product price ratio
d. the production possibilities frontier and in the input prices

A

c.

29
Q

All decisions of input purchases and output production are determined by:

a. relative prices
b. the Law of Diminishing Marginal Returns
c. scarcity
d. the production function

A

a.

30
Q

If a Production Possibilities Frontier intersects an isorevenue line at two points, then:

a. there are two choices of maximum revenue output combinations
b. profits could be higher on a higher isorevenue line
c. there is a lower isorevenue line where the PPF will intersect at only one point
d. no maximum revenue combination is possible

A

b.

31
Q

The slope of the isorevenue line is equal to:

a. TC/P1
b. TR/P2
c. TR/P1
d. -P1/P2

A

d.

32
Q

A Production Possibilities Frontier (curve) represents:

a. how much wheat can be produced in the US in a given year
b. all combinations of two outputs that can be produced with a varying level of inputs
c. all combinations of two inputs that can be used in the production of outputs
d. all combinations of two outputs that can be produced with a fixed level of resources

A

d.

33
Q

If all resources are used to produce a single output, then:

a. the firm is located on the PPF
b. the firm is located inside the PPF
c. the firm is located outside the PPF
d. none of the other answers

A

a.

34
Q

If all resources are used to produce a single output, then:

a. the firm is located on the axis that corresponds to that output
b. the firm is located on the isorevenue line
c. the firm is located at the origin
d. the firm is not maximizing profits

A

a.

35
Q

Productive efficiency is found:

a. on isorevenue line
b. inside an isocost line
c. inside the isoreveue line
d. on PPF

A

d.

36
Q

Technological change in the good located on the vertical axis (Y2):

a. shifts the PPF out symmetrically
b. shifts the PPF out to the right
c. shifts the PPF up
d. keeps the PPF constant

A

c.

37
Q

Technological change in agriculture is a result of mostly:

a. a change in relative prices
b. research at agricultural universities
c. management skills
d. none of the above

A

b.

38
Q

If the price of an output increases, ceteris paribus:

a. producers will substitute into the production of that good
b. producers will substitute out of the production of that good
c. there will be no change
d. consumers will benefit

A

a.

39
Q

The MRPS is:

a. the rate at which one input must be decreased as production of the other input is increased
b. the rate at which one output must be decreased as production of the other output is increased
c. the slope of the isorevenue line
d. the slope of the isoquant

A

b.

40
Q

In equilibrium:

a. MRPS = slope of isorevenue line
b. MRPS = slope of isocost line
c. MRPS = slope of isoquant
d. MRPS = horizontal

A

a.

41
Q

The MRPS is equal to: ^ is delta

a. ^Y2/ ^Y1
b. ^X2/ ^X1
c. ^Y/ ^X
d. ^X/ ^Y

A

a.

42
Q

The isorevenue line is:

a. a line depicting all combination of two inputs that yield a constant level of costs
b. a line depicting all combination of two inputs that yield a constant level of costs
c. a line depicting all combinations of two inputs that yield a constant level of revenues
d. a line depicting all combinations of two outputs that yield a constant level of revenues

A

d.

43
Q

An isorevenue line is:

a. convex to the origin
b. concave to the origin
c. horizontal
d. linear

A

d.

44
Q

If ^Y2 P2 > ^Y1/P1 then:

a. the firm could increase revenue by moving into Y2
b. the firm could increase revenue by moving out of Y2
c. the firm could increase revenue by remaining at the same output combination
d. not enough information to answer

A

a.

45
Q

If ^Y2/ ^Y1 > ^Y2/ ^Y1 then:

a. the firm could increase revenue by moving into Y2
b. the firm could increase revenue by moving out of Y2
c. the firm could increase revenue by remaining at the same output combination
d. not enough information to answer

A

a.

46
Q

In the real world, agribusiness firms:

a. cannot change output combinations
b. change output combinations based on relative prices
c. change output combinations based on managerial skill
d. none of the other answers

A

b.

47
Q

A change in relative prices will affect the:

a. PPF
b. isorevenue line
c. MRPS
d. rate of technological change

A

b.

48
Q

Technological change will affect the:

a. PPF
b. isorevenue line
c. MRPS
d. relative prices

A

a.

49
Q

A drought in the Midwestern US will affect the:

a. PPF
b. isorevenue line
c. MRPS
d. rate of technological change

A

a.

50
Q

Technological change will shift the PPF:

a. to the left
b. down and to the left
c. inward
d. outward

A

d.

Ag Econ (10 decks)

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