# FFATEST

Question:
Mr. Jones plans to buy a new tractor that has a purchase price of $30,000.  His dealer will finance the tractor under the following terms:  20% down payment with the balance repaid in equal annual payments over the next 3 years.  The interest rate is 15% per year. How much interest will Mr. Jones pay in the first year of the loan?


A:
The financial ability to meet current obligations.

B:
The financial ability to cover all debts should the owner have to sell out.

C:
The capacity of an asset to be used for more than one purpose.


Question:
Which of the following would be considered a current liability?

C:
A five year loan to buy breeding cattle.


Question:
The income statement is a very valuable financial statement that can provide information on:

A:
The time during the year when cash will be received and when bills will have to be paid.

B:
Farm operating debt requirements and repayment capacity.

C:
How profitable the business has been during the past year.


Question:
The liability of an owner in a corporation is limited to:

A:
All debts and obligations of the corporation up to the amount of his investment in the corporation.

C:
All debts and obligations of the corporation.

D:
Has no liability for debts and obligations of the corporation since it is a separate legal entity.


Question:
If you need to borrow to finance annual farm operating expenses, the most likely lender would be:


Question:
The effect of overestimating the ending corn inventory for 19X1 by $2,000 (assuming all other records are correct) is:

A:
Cash expenses are understated by $2,000 in 19X1.

B:
Net farm income for 19X1 is overstated by $2,000.

C:
Ending net worth is understated by $2,000 for 19X0.

D:
19X0's net farm income will be overstated by $2,000 (assuming all ending inventory records are correct for the following year).


Question:
Which one of the following is a valid use of a cash flow budget for a farm or ranch business?

C:
Measuring the financial growth of the farm business.


Question:
Another term for owner's equity (the amount of capital the owner has invested in the farm) is:


Question:
A written agreement by which an owner of property transfers the title to someone to manage and safeguard for the benefit of beneficiaries is a:


Question:
Which type of cash flow statement would be of greatest value to the manager of a diversified farming operation? (A diversified farm would have several non-related enterprises).


Question:
Which of the following is the most likely credit source for a loan to buy feeder calves or pigs?


Question:
One of the best measures of financial progress over a period of years would be:


A:
Should include farm cash inflows and outflows, but exclude family living requirements.

B:
Should include family living expenses, but exclude principal and interest payments on debt against the farmland.

C:
Should include farm cash inflows and outflows, family living requirements and principal and interest payments on debt.

D:
Should include family living requirements and debt payments, but exclude farm cash inflows and outflows.


Question:
Under the discount method for calculating interest:

A:
Interest is charged on the actual amount of money outstanding.

B:
Interest is calculated on the total amount of the loan and then subtracted from the principal balance.

C:
Interest is charged on the original loan amount and added to the principal balance.

D:
Interest is calculated and paid at the end of the loan repayment period.


Question:
A loan to purchase a tractor is often called:


Question:
A farmer's net worth statement showed the following balances: Current Assets=$20,000, Current Liabilities=$20,000, Fixed Assets=$180,000, and Long-term Liabilities=$80,000.  What percent equity does the farmer have in his operation?


Question:
A complete list of farm business assets and the values assigned to each is called a:


Question:
Which of the following is the primary purpose of a current ratio?

C:
To determine your ability to meet immediate financial obligations.

D:
To aid in evaluating your farm profitability.


Question:
Intermediate term loans would typically be made for each of the following except:


Question:
The cash deficit or surplus on a cash flow statement is:

A:
The difference between net farm income and net farm expense.

B:
The difference between the value of total assets and the value of total liabilities.

C:
The amount available for family living expenses.

D:
The difference between total monthly cash receipts and total monthly cash outflows.


Question:
Sources of information useful for developing a cash flow projection include:

A:
Crop and livestock enterprise budgets for the farm operation.

B:
A farm plan showing the number of acres of crops and head of livestock planned for the year.

C:
An estimate of family living requirements, debt repayment commitments and taxes.


A:
A schedule of expected returns and costs.

B:
The output required for revenue to equal the total of fixed and variable costs.

C:
Costs of the variable inputs needed to obtain output.

D:
A specific process or activity producing a single output.


Question:
In the futures market for corn, one futures contract covers:


Question:
When a borrower puts up collateral to obtain a loan he:

A:
Promises to pay a set amount each period.


Question:
In order to borrow funds from the Farm Service Agency, a producer must:

A:
Become a member of this cooperative through purchase of type B stock.

B:
Be unable to obtain sufficient credit elsewhere at reasonable rates and terms.

C:
Have little chance of making the farm operation work.

D:
Be young and just getting started in farming.


Question:
Which item should NOT be included in a cash flow projection?

A:
Anticipated income from non-farm sources.

C:
Anticipated depreciation expense on equipment.

D:
Cash received from sale of tractor which is no longer being used.


Question:
A cash flow statement is used for which of the following financial purposes?

A:
Determine anticipated change in net worth.

B:
Determine the amount for funds available to service debt.

C:
Determine net income for a given period.

D:
Determine the optimum farm organization.


Question:
Which of the following statements concerning a cash flow statement is INCORRECT?

A:
Total cash inflow = receipts from sale of products + receipts from sale of breeding livestock + wages from off-farm employment.

B:
Total cash outflows = payments for operating inputs + long and intermediate loan payments - depreciation expense.

C:
Cash position = total cash inflows - total expenditures.

D:
Money borrowed = cash position - minimum acceptable cash balance.


Question:
Which of the following is NOT a reason that merchants and dealers offer credit to their customers that are farm or ranch operators?

A:
They hope to generate a profit on credit sales.

B:
They enjoy making out bills and sending them to customers.

C:
They hope to improve the seasonal distribution of their sales.

D:
Provide a convenience to their customers.


Question:
In making loans to farmers and ranchers life insurance companies:

A:
Provide a full range of loans including short-term operating loans, intermediate term loans and long-term real estate loans.

B:
Primarily make long-term real estate loans.

C:
Do not currently have any money loaned to farmers or ranchers.


Question:
Which of the following loan terms may it be possible for the borrower to negotiate with the lender?


Question:
Which financial statement measures the profitability of the business?


Question:
If cash uses exceed cash sources for a given month which of the following might a manager do?

A:
Postpone the purchase of a new machine he had planned to buy.

B:
Reduce operating expenses where possible.

C:
Sell some grain now that he had planned to keep in storage for a few more months.


Question:
Which of the following human characteristics of a prospective borrower are important to a lender?

C:
Willingness to cooperate with the lender.


Question:
What things does a lender try to learn about a prospective borrower from the credit bureau?

A:
Whether or not he keeps his machinery in good repair.

B:
His or her past repayment history and credit difficulties.

C:
Whether he has any financing statements filed in the county clerk's office against any of his personal business property.


Question:
Historically, individuals have held about 15% of the total outstanding farm debt.  Which of the following are characteristics of loans made by individuals?

A:
They are primarily short-term farm or ranch operating loans.

B:
They are primarily long-term loans to finance the purchase of real estate.

C:
The IRS will let the individual charge as low an interest rate as he wants without penalty.


Question:
Which of the following factors may indicate to the lender that he has a problem loan?

A:
If the collateral pledged for a loan disappears.

B:
If it is discovered that the borrower has provided fraudulent information on his balance sheet.

C:
If the borrower is several months delinquent on a scheduled loan payment.


A:
The tenant pays all the expenses and pays the landlord a specified cash rent per acre.

B:
The landlord and tenant share both production and market risks.

C:
The landlord pays all the production expenses and shares the income received from the sale of crops with the tenant.

D:
Crop share leases are not used by farmers.


Question:
In preparing for a cash flow plan for the coming year, a farmer estimates that total cash inflows exceed total cash outflows for the month of July.  This indicates that:

A:
The operating loan will likely increase during the month of July.

B:
Cash will be available to reduce the operating loan in July.

C:
Family living expenses should be reduced during the month of July.

D:
Net farm income will be higher than last year.


Question:
A security agreement reduces the risk of a loan for:


Question:
The type of insurance which builds up a cash value and which may be used as a source of loans to policy holders is:


Question:
The farm business profit for a year would be found on:


Question:
If Mr. or Mrs. B. Angus Breeder have liabilities totaling $540,000 and claim net worth of $750,000, what is their debt/equity ratio?


Question:
Which of the following statements correctly describes the first year's payment on $9,000 loan on which the principal is to be repaid in 3 equal installments with the interest charged at 10%?


Question:
Today's farmer has many types of insurance policies, including life insurance, property damage, fire insurance, and health insurance. When a farmer insures, he is:

A:
Paying a small amount to have the risk transferred to another person or institution.

B:
Paying a small amount to guarantee he will not be subject to any risk and possible danger.

C:
Convinced that attorneys and legal proceedings are not necessary.

D:
Reducing his costs of production and assuring a smooth transfer of the business to the next generation.


Question:
A constant payment loan with payments consisting of principal and interest is called:


A:
Lease payments are tax deductible while interest payments are not.

B:
Leasing provides a larger deduction for depreciation.

C:
Leasing does not require as much capital.

D:
Investment credit can be used for leasing.


Question:
Ownership costs of a tractor include all but which of the following?


Question:
The percent of profits that the landlord and tenant each receive from a livestock share arrangement should:

A:
Be as closely related to the crop base as possible.

B:
Depend on the typical profits each has received in the past.

D:
Be based on the contribution of each party to the business.


Question:
When calculating the value of feed fed to livestock, home grown feeds should be valued according to:


Question:
The major advantage of renting or leasing over purchasing machinery is to:


Question:
Which would not be listed on the income statement?

C:
Sale of 10 hogs weighing 225 lbs. each at $40.00/cwt.

D:
Marketing charges of $2.00/cwt. of hogs sold.


Question:
Mr. Moore has already spent $4,000 on his apple orchard this year for sprays, pruning and fertilizers.  He has a bumper crop of 1,000 bushels of apples which he expects to market for $5.00 per bushel.  He can have his apples picked by a crew for $2.50 per bushel.  Or, he can let the public pick the apples for $4.00 per bushel.  What should Mr. Moore do with his apples this year?

A:
Leave the apples on the trees since he will lose money anyway.

B:
Sell his apples to the public on a pick-it-yourself basis.

D:
Use the labor crew for half the orchard and let the public pick the other half.


Question:
A farmer using the cash basis of accounting for tax purposes was facing unusually high federal income taxes for 20X1.  Which of the following actions during the last week of 20X1 would reduce his income taxes under the cash basis?

B:
Forward contract his cattle for sale in March, 20X2.


Question:
The farm manager should continue to add units of an input to the point that the value of the resulting output:

B:
Is equal to the value of the time involved in making the decision.


Question:
The farm corporation may have the following advantages relative to the sole proprietorship:

B:
Tax savings for the one-owner business with less than $15,000 net farm income.

C:
Lower social security taxes for the owner-operator to pay on his salary.


Question:
A farmer can earn $60 per acre growing corn, $50 per acre growing cotton, and $40 per acre growing wheat.  The opportunity cost of growing wheat is:

D:
The value of the farmer's labor in each of these crops.


Question:
The main importance of capital gains is that:

B:
It is used in computing investment credit.

C:
Capital gains income is in a separate class for taxation purposes.


Question:
Certain farm expenses are deductible for income tax purposes while others are not.  Select the following list in which all items represent deductible farm expenses.

A:
New tires for tractor, veterinary expenses, combine repairs, interest on cattle loan.

B:
Vacation expenses, principal payment on farm loan, purchase of a new tractor.

C:
Cost of a new barn, purchase of stocker steer, new motor for combine.


Question:
Referring to fixed costs such as insurance and taxes and variable costs such as feed and fertilizer, which of the following costs must be paid by the farmer if nothing is produced?


Question:
Which of the following is most likely to be a fixed cost?


A:
Cover such items as feed, seed, fertilizer, and fuel.

B:
Do not increase at more than the rate of inflation.

C:
Do not change when the level of production changes.


Question:
Which of the following statements concerning partial budgeting is true?

A:
Partial budgeting may be used to develop a whole farm plan.

B:
Added returns and added costs are assumed to determine the total additional income from a proposed change in the farm business.

C:
Partial budgeting is a whole farm planning tool.

D:
Added costs and reduced returns are assumed to determine the total change in income from a proposed change in the farm business.


Question:
Variable costs are best defined as those costs which:

A:
Necessarily increase because of inflation.

B:
Change when the level of production changes.

C:
Are increased when a new tractor is purchased.


Question:
When analyzing the profitability of a farm business, the first item to consider is the:


Question:
To estimate the costs, returns and cash flows associated with producing one acre of wheat, a farmer would use:


Question:
Assume a cattle producer is feeding a ration of corn, milo, soybean meal, and alfalfa hay.  If the price of corn increases by 30%, he should:


Question:
A wheat farmer did some on-farm research with fertilizer response. He applied 100 lbs. of fertilizer per acre and got a yield of 40 bushels per acre.  Where he applied 150 lbs. of fertilizer his yield was 42 bushels, and where he applied 200 lbs. his yield was 43 bushels per acre.  What he observed illustrates the principle of:


Question:
Which of the following is a variable cost?


Question:
The opportunity cost of an investment in new farm equipment is associated with:

A:
The amount of income that new equipment will generate.

B:
The income that could have been obtained by using the investment expenditure in its next most profitable activity.

C:
The lost opportunity to spend more money on clothes and vacations.

D:
The increase in farm income generated by the new equipment minus the costs of operating it.


Question:
In most crop enterprise budgets the cost of land is generally considered to be a:


Question:
Under the Modified Accelerated Cost Recovery System (MACRS) of depreciation the recovery period for new machinery compared to used machinery is:


Question:
Mr. Jones is currently growing wheat on a 40 acre tract of land. He plans to use a partial budget to determine if barley will be more profitable.  Which of the following items would NOT be included in the partial budget?


A:
Is designed primarily for use in determining whether changes considered in the farm will be profitable.

B:
Is set up to plan a portion of the entire farm business organization.

C:
Is a plan for using the physical and financial resources of the entire farm business and estimates the resulting net income.

D:
Is a statement of what generally is expected from a particular production practice when producing a specified amount of product.


Question:
Which of the following would be included in a whole farm budget?

C:
Total costs and returns associated with crop and livestock activities.


Question:
One of the most important points to consider in developing a lease between a tenant and a landlord is that it should:


A:
Estimate the costs and returns for producing one unit of a crop activity.

B:
Determine the taxes which must be paid on last year's income.

C:
Estimate the change in net income which will occur due to a change in a part of the farm.


Question:
Variable costs change as the level of production changes.  Fixed costs are incurred even without production.  For a cattle feeder, which of the following is a fixed cost?


Question:
A taxpayer may elect to use the MACRS straight-line instead of the Regular MACRS.  If he does he must use this recovery period for all personal property in this class.  A taxpayer might desire a twelve year life compared to a seven year life when his income is


Question:
Commercial fertilizer should be applied to crops as long as:

A:
The added returns increase gross farm income.

B:
The added fertilizer maintains soil productivity.

C:
The added returns are more than the added cost of the fertilizer.

D:
The added fertilizer increases crop yields per acre.


Question:
With limited capital, a farm operator would tend to invest his available capital in:


Question:
Which business organization structure establishes the limit on liability of investors so that assets of investors cannot be encumbered beyond investment?


Question:
Which of the following is not a depreciable asset?


Question:
Which of the following personal characteristics should NOT be considered when buying insurance?


Question:
Which of the following is not considered an ordinary farm business expense for tax purposes in the year it is paid?


Question:
The objective of good tax management is to maximize after-tax net income.  Which of the following is NOT a sound tax management strategy?

C:
The use of the cash method or accrual method of accounting.


Question:
Farm business expenses are classified as ordinary and necessary costs of operating a farm and are deductible for tax reporting purposes.  Which of the following is NOT an expense of an unincorporated farm or ranch?

D:
All of the above are farm business expenses.


Question:
Which of the following types of lease arrangements is least risky for the landlord?


Question:
An association of two or more individuals who as co-owners carry on a business for a profit is a:


Question:
A primary reason for setting up a corporation is:


Question:
Sole proprietorships have all the following advantages EXCEPT:

A:
Business can be quickly expanded or contracted.

C:
Continuity of management over a long period.


Question:
The oldest and most widespread legal form of business organization is the:


Question:
The Banks Ranch projected cash flow budget includes:

A:
Cash and accrual expenses and debt payments.

B:
Cash and accrual income, cash and accrual expenses, and debt payments.

C:
Projected cash income, cash expenses, and debt payments.

D:
Expenses, inventories, and debt payments.


Question:
Assume a farmer's cow-calf operation is unprofitable and therefore the capital tied up in his cows could be invested in stocks, bonds, land or some other asset.  This illustrates the principle of:


Question:
Which of the following is NOT a principle used in making insurance decisions?

A:
Insure against losses which may result in financial disaster.

B:
Insure against all events which may result in losses.

C:
Never insure against losses which you can pay without undue personal stress.

D:
Insure to substitute a small certain cost for a larger uncertain cost.


Question:
Which of the following is NOT an advantage of a crop share lease to a tenant?

B:
A high yield or an exceptionally good crop price may occur.

D:
The landlord will share some variable production expenses.


Question:
An individual who wished to purchase life insurance protection for the lowest premiums should buy:


Question:
Farmer Jones is dissatisfied with the profits he has been making growing corn, wheat and milo.  He wants to explore the opportunities of growing high-value crops like cauliflower or carrots.  Before he plants these crops, he should evaluate:


Question:
Farmer Bill trades in an old tractor (worth $2,000 on his depreciation schedule) for a new model.  The new tractor's list price is $75,000.  But the dealer is willing to sell the new tractor to Bill for $68,000 cash plus the old one which he says has an estimated market value of $7,000.  When Bill puts the new one on his depreciation schedule, how much can he depreciate?


Question:
The production function shows the response of output to different applications (or amounts) of input.  What can cause the production function to shift upward?


Question:
The primary purpose of an enterprise budget is to show:

A:
Profitability of a particular enterprise.


Question:
The rational stage of a production process falls in the area called Stage II of the production function.  Stage II is the area in which:

A:
Marginal physical product is increasing.

C:
Marginal physical product is greater than average physical product.

D:
Marginal physical product is less than average physical product but greater than zero.


Question:
Stage III of the production function is an irrational region because:

A:
An additional unit of input costs more in Stage III than it did in Stage II.

B:
An additional unit of input causes a reduction in output.

C:
Marginal cost is less than marginal revenue.


Question:
Throughout Stage II of the production process, average physical product is falling.  The marginal-average rule (as well as logic) tells us then:

A:
Marginal physical product is above average physical product.

B:
Marginal physical product is below average physical product.

C:
Marginal physical product is equal to average physical product.

D:
Marginal physical product has no effect on this answer.


Question:
Which of the following is considered the first step in developing a budget?

A:
Selecting the market prices for inputs and outputs.

B:
Selecting the physical data for inputs and outputs.

C:
Appraising the bushiness and family goals and objectives.

D:
Calculating the expected costs and returns, including variable and fixed costs.


Question:
Which of the following is considered one of the four factors of production?


Question:
From the following production function data, identify the stage of the production.   If input = 3, Total Physical Product (TPP) = 210; if input = 4, TPP = 240; if input = 5, TPP = 250.


Question:
What strategy would you implement if the cash position in a certain month indicated that there would be more expenses than income?

A:
Use savings, delay expenses, move sales, or borrow money.

B:
Terminate the enterprise causing the cash flow problem for that month.

D:
Change from cash to accrual accounting method.


Question:
The following is a response of green chile to fertilizer application.  600 pounds per acre of fertilitzer per acre yields 3 tons of green chile per acre; 900 pounds yields 7 tons per acre; and 1,200 pounds yields 9 tons per acre.  If chile sells for $30/ton and fertilizer costs $20 per 100 pounds, how much fertilizer should be used?


Question:
Based on the following information showing the yield that different levels of nitrogen used per acre of wheat, which statement is most nearly correct?  10 pounds of nitrogen per acre is needed to produce 38 bushels per acre; 20 pounds of nitrogen produces 42 bushels per acre; and 30 pounds of nitrogen produces 44 bushels per acre.

A:
The bushels added to the total yield by each successive 10# of additional nitrogen increases at a uniform rate.

B:
The bushels added to the total yield by each successive 10# of additional nitrogen increases at a diminishing rate.

C:
The bushels added to the total yield are greater at the 20# level.

D:
The 30# rate will yield the best return on farmer's investment in fertilizer.


Question:
A partnership has which advantage over a corporation?

B:
Can exist without interruption upon death of stockholders.

C:
Is liable only to the extent of its assets.

D:
Business must be conducted by a paid staff member employed by the board of directors.


Question:
Harry Haymaker wants to determine if he should rent additional acreage to eliminate currently purchased hay for his dairy herd. Which of the following items would not be considered in a partial budget?

D:
Machinery and labor availability and requirements.


Question:
You operate a farm in partnership with Aunt Harriet who contributes land worth $85,000 and part of the operating expenses at $15,000. If you contribute your machinery at $50,000 and labor worth $15,000 as well as $35,000 for operating expenses, what should your share of the $250,000 gross income be if you share income according to your contribution?


Question:
A farmer can earn $75 per acre from growing corn, $60 per acre from growing milo, and $50 per acre by renting the land to his neighbor.  The opportunity cost of raising milo is:


Question:
Which one of the following groups describes the items used to calculate the fixed cost of machinery and equipment?


Question:
Which of the following is a capital investment in farm accounting?


Question:
Subchapter S Corporations differ from regular Corporations in that they:

A:
Terminate as a business enterprise on the death of a member.

B:
Must have at least 20 voting stock holders.

C:
Determine the current relationship of production and marketing activities.


Question:
Les Moore recently sold an old hay baler for $250, that was originally purchased for $5,000.  The baler was fully depreciated out last year and therefore had a book value of zero.  On his tax return he must:

A:
Declare the $250 recapture as ordinary taxable income.

D:
Not list the $250 since the baler was depreciated-out.


Question:
Clyde Cashcropper is having a very good farm business year and it looks as if taxable income is going to be significantly (about $10,000) above last year.  Which of the following tax management procedures would be most effective in adjusting taxable income prior to the end of the year so as to reduce income tax liability?

B:
Buy $10,000 worth of fertilizer ahead for next year.

D:
Construct a $12,000 machinery storage barn.


Question:
In the short run, the decision of a farmer to produce or not produce should depend on whether or not the expected income will be sufficient to:


Question:
A farmer has an average fixed cost of $12 per acre on land planted to corn.  Assuming that the variable cost required to produce one bushel of corn remains the same, if the farmer increases corn production per acre he will:

A:
Lower the per bushel cost of producing corn.

B:
Increase the per bushel cost of producing corn.

C:
Not affect the per bushel cost of producing corn.

D:
Decrease the variable costs of producing corn.


Question:
A farmer's economic efficiency is improved whenever:

B:
A given amount of resource is reallocated to increase profit.


Question:
If by increasing the acreage of alfalfa in a corn-alfalfa rotation, the production per acre of both corn and alfalfa increase, the corn and alfalfa enterprises are:


Question:
Assuming that a farmer is efficiently managing his farm business, the last dollar spent on a factor of production, such as seed, fertilizer, machinery or buildings will yield a marginal or added return:

A:
Greater than the last dollar earned from all other factors of production

B:
Exactly equal to the last dollar earned from all other factors of production

C:
Less than the dollar earned from all other factors of production

D:
Twice as large as the last dollar earned from all other factors of production.


A:
Should be kept in sufficient detail to answer any questions regardless of the cost of collection.

B:
Should provide a basis for analysis of the business.


Question:
The total farm budget is best described as:

A:
A physical and financial plan for the operation of the entire farm.

B:
An accounting of physical quantities of inputs utilized and outputs produced for an enterprise.

C:
A statement of the financial condition of the farm firm.


Question:
When a reduction in the level of production of one enterprise causes an increase in the level of production of another enterprise, these two enterprises are said to be:


Question:
If the supply curve shifted left and the demand curve remained constant:

A:
The price of the product would increase.

B:
The price of the product would decrease.


Question:
The elasticity of a demand curve for a product is mostly determined by:

A:
How many substitutes there are for the product.


Question:
The major advantage of forward contracts versus other forms of selling is that they:


Question:
If tea and coffee are substitutes, then an increase in the supply of coffee will:

A:
Increase the demand for tea, all other things equal.

B:
Decrease the supply of tea, all other things equal.

C:
Decrease the demand for tea, all other things equal.


Question:
Price elasticity is the percentage change in quantity demanded which results from a given change in price.  If a 10% change in price causes a 20% change in quantity demanded, the commodity is said to be:


A:
Consumers will buy more of a given product at high prices than they will at low prices.

B:
Price and quantity demanded are positively related.

C:
The larger the number of buyers in a market, the lower will be the product price.

D:
Price and quantity demanded are inversely related.


Question:
If the Japanese government establishes a stiff quota on the importation of soybeans, this will:

A:
Reduce the demand for U.S. soybeans, all other things equal.

B:
Cause soybean prices to fall in the U.S., all other things equal.

C:
Lead to cheaper soybean meal and cottonseed meal prices in the U. S. all other things equal.


Question:
A smaller than normal crop of grain results in a shift of the:

A:
Supply curve downward to the right and higher prices.

B:
Demand curve downward to the left and lower prices.

C:
Supply curve downward to the right and lower prices.

D:
Supply curve upward to the left and higher prices.


Question:
A price ceiling set below the equilibrium price creates:


Question:
The ratio that shows how much of farm income is used to pay for borrowed capital is:


Question:
The demand curve shows the relationship between:


Question:
One important function performed by prices in a free market system is to:

B:
Insure a profit to all productive firms.

D:
Reduce interdependence within an economy.


Question:
If a cattle feeder intends to hedge the cattle he places on feed, he will need to:

A:
Sell a cattle futures contract for delivery in the month nearest to when the cattle will be sold on the cash market.

B:
Buy a cattle futures contract for delivery in the month the cattle will be sold on the cash market.

C:
Buy a cattle futures contract for delivery in the same month the cattle were placed on feed.


A:
To reduce the risk of any upward change in cash wheat price.

B:
To reduce the risk involved with downward changes in cash wheat price.

C:
Because he has nothing better to do with his extra cash.

D:
Pay commission fee and insure that brokers have a job for the good of the community.


Question:
A speculator with a long position in the futures market:


Question:
The higher the price of strawberries, other things being equal, the quantity consumed:

D:
Cannot be predicted from information given.


Question:
An exempt coop has sales of $100,000, cost of goods at $80,000, expenses of $10,000, and non-member business of 50%.  Tax rate is 50%.  Farmer A (a non-member) did $10,000 worth of business with coop.

A:
Farmer A is entitled to $1,000 patronage dividends.

B:
Farmer A is entitled to $500 patronage dividends.

C:
Farmer A is entitled to $250 patronage dividends.

D:
Farmer A is NOT entitled to dividends since he is a non-member.


Question:
If you hedge and are long in the futures market and prices decrease, you:


B:
Control is in the hands of the local producers.


Question:
A new hormone has been developed that will increase the feed efficiency of chickens.  At the same time, the government announces that excess consumption of beef and pork increases the risk of heart attacks but excess consumption of chicken and fish does not. The price of chicken will:


Question:
Basis is the difference between the prices for:

A:
The cash market for one location and the cash market for another location.

B:
The futures market for one commodity and the futures market for another commodity.

C:
The cash market for one location and the futures market.


Question:
Factors that cause a change in supply include:


Question:
The financial ratio that determines the ability of the business to meet short-term debt and other obligations from available cash.  A measure of liquidity.


Question:
The July wheat futures are trading at $6.00 with the cash at $5.80. You place a hedge at this time (you're a wheat producer).  The basis at the time you sell in the cash and lift your hedge is $.60/bushel.  What price did you receive?


Question:
If the demand curve for a product is inelastic then:

A:
Price increases cause total revenue to increase.

B:
Price decreases cause total revenue to increase.

C:
Price changes will not affect total revenue.

D:
Price increases cause total revenue to decrease and then increase later.


Question:
A typical wheat producer hedges her wheat crop with a beginning basis of 40 cents per bushel.  When she lifts her hedge the ending basis is 30 cents.  She:

A:
Received as a net price the cash price at the time the hedge was placed plus 30 cents.

B:
Received as a net price the cash price at the time the hedge was placed plus 10 cents.

C:
Received as a net price the cash price at the time the hedge was placed minus 10 cents.


Question:
The purpose of the Capper-Volstead Act was to:

B:
Make a name for Senators Capper and Volstead so they could be re-elected.

C:
Stop prosecution of agricultural coops for breaking antitrust laws.


Question:
The demand for a product is said to be inelastic if:

A:
A drop in price is accompanied by an increase in the quantity demanded.

B:
A drop in price is accompanied by a decrease in the quantity demanded.

C:
The elasticity coefficient is greater than 1.

D:
Consumers are largely indifferent to a per-unit price change.


Question:
If steak is a NORMAL GOOD, then an increase in average real income will:

A:
Lead to a reduction in per capita consumption, all other things equal.

B:
Lead to a rise in per capita consumption, all other things equal.

C:
Have an adverse impact on the average rancher.


Question:
If one company becomes the only seller of tractors in a market, the market structure is:


Question:
The financial ratio that measures the amount of cash available to purchase input and inventory items after the sale of current farm assets and payment of all current farm liabilities.


Question:
The futures markets are being used by more and more agricultural producers.  Which of the following is a valid explanation of the increase in popularity of futures markets with producers?

A:
Futures markets can be used to reduce price risks that agricultural producers must face in producing agricultural commodities.

B:
Futures markets provide an easy way for farmers and ranchers to pick up a few extra dollars with little time and effort.

C:
Futures markets generally will offer a substantially higher price for commodities than prices available at local markets.

D:
Most farmers and ranchers have learned to place a great deal of trust and confidence in futures traders.


Question:
If Williams Farms decides to use the futures market to hedge the price of market cattle to be sold in the future they would initially:

A:
Buy futures contracts expecting to sell contracts when the cattle are sold.

B:
Buy futures contracts expecting to buy more contracts when the cattle are sold.

C:
Sell futures contracts expecting to sell more contracts when the cattle are sold.

D:
Sell futures contracts expecting to buy them back when the cattle are sold.


Question:
An agricultural cooperative differs from a regular business:

B:
Because ag coops are run by and for the people that use them, not the people that own them.


Question:
Farmer Jones marketed 35,000 bushels of wheat through his local cooperative and Farmer Smith marketed 70,000 bushels of wheat through the same local cooperative.  This is the only business each had with the cooperative in 19X1.  When patronage dividends are distributed for 19X1,

A:
Democratic principles apply and each will receive the same amount.

B:
Farmer Smith will receive one-half as much as Farmer Jones.

C:
Farmer Jones will receive one-half as much as Farmer Smith.

D:
Neither will receive patronage dividends.


Question:
The price of beef is determined by the supply of beef and demand for beef.  A change in price occurs when the demand for beef increases or decreases even though the supply remains constant. Which of the following causes a shift in the demand for beef?


Question:
Farmer Jones planted wheat and decides she wants to hedge the crop. She should:

C:
Can't hedge wheat, since there is no wheat futures market.


Question:
A corn producer hedges his corn crop with the December corn futures at $4.00 per bushel.  When harvest is complete, he sells his corn in the cash market for $3.00 per bushel and offsets his hedge at $3.50 per bushel.  His net price received for his corn is:


Question:
A grain elevator buys cash grain for $3.00 per bushel and hedges it at $3.25 per bushel with a December corn contract.  The elevator manager later sells the cash grain for $2.90 per bushel and lifts the hedge at $2.95 per bushel.

A:
The grain elevator had a basis improvement.

B:
The grain elevator had a basis deterioration.


C:
Negotiates for more favorable contracts for members.


A:
Limits the return on capital stock to 8%.

B:
Limits the amount of non-member business to no more than 50%

C:
Limits the voting to one person - one vote based on capital stock.


Question:
If Farmer Jones did 10% of the total business of a cooperative, he is entitled to:

B:
More than 10% of the patronage dividends.

C:
Less than 10% of the patronage dividends.


Question:
One of the worst measures of a cooperative's success is:

B:
How quickly deferred patronage dividends are repaid.


Question:
A disadvantage of projected cash flow is that:

B:
It shows when excess cash will be available.

C:
It lets you evaluate relationships of short-term debt to repayment capacity.

D:
Projecting revenue is difficult to estimate due to price and production unertainties.


Question:
If the demand curve shifts right, other things being equal, then:


Question:
The population of the country increased and at the same time the cost of producing corn increased.  The price of corn should:


Question:
If a new more productive method of producing a product was adopted then:


Question:
If the supply curve shifts left, it is said to have:


Question:
Which of the following does not cause a change in demand for a product?


Question:
Increasing leverage during a period when the rate of return to total capital is less than the interest rate will result in:


Question:
In bumper crop years, agricultural prices will generally decline:

A:
Because farmers don't need the extra income.


Question:
Green Hill Farms raises 2,000,000 broilers annually.  In addition, Green Hill Farms owns the feed mill which provides feed for the birds, owns the processing facility and markets the dressed birds to retail grocery stores.  This type of business structure is known as:


Question:
A corn grower asks your assistance in marketing some of his corn crop.  He could currently sell the corn for $3.50 per bushel. He believes that in 6 months the price will increase to $4.00.  He can obtain 14% on money market funds.  Storage of the corn costs 2 cents per month per bushel.  What should he do?


Question:
The price elasticity of demand for feed grains is less than one (inelastic).  Therefore, as the price of feed grains declines:

A:
Feed grain producers will sell more grain and receive less revenue.

B:
Feed grain producers will sell less grain and receive less revenue.

C:
Feed grain producers will sell more grain and receive more revenue.

D:
Feed grain producers will sell less grain and receive more revenue.


Question:
A farmer wishes to hedge his corn crop in July.  The futures contract price for December corn is $3.10 and he expects the price of corn at harvest to be much lower.  How could he complete his hedge?

A:
Buy a December futures contract and hold it until he harvests his grain.  Sell the futures contract at that time.

B:
Sell a December contract in July, sell his cash grain in November, and buy back the futures contract in December.

C:
Sell a December futures contract in July, on the same day the cash grain is sold, buy a December futures contract.


Question:
Agricultural cooperatives are organized and operated primarily to:

A:
Provide jobs for individuals not able to farm.

B:
Market products and/or supply inputs efficiently to the member patrons.

C:
Promote agriculture in developing countries.

D:
Accumulate capital and provide dividends to its patrons.


Question:
If the supply of grain sorghum increases, other things remaining the same, we would normally expect a decrease in:


Question:
Barley and wheat are competitive for productive resources.  A fall in the price of wheat will normally cause the supply curve of barley to:


Question:
The difference between the retail price of a product and the farm price of the same product is called:


Question:
Why do farmers have little control over the prices of the products they produce?

A:
Middlemen establish the price levels and do not react favorable to farmers.

B:
Many sellers are competing in a market relative to the number of buyers.

C:
Futures market prices are difficult to contradict.

D:
The federal price stabilization board does not allow large price movements.


Question:
The chain of command for a federated cooperative is:


C:
Producers can't hedge with futures contracts.


B:
Is always a centralized exempt business.


Question:
If producers hedge with a commodity futures contract:

B:
They are trying to find another place to deliver their product.

C:
They are trying to protect against adverse price movements.


Question:
A centralized cooperative has a chain of command:


Question:
If income goes up and the consumption of a product decreases, (in percentage terms), the product is said to be:


Question:
If a product has an inelastic demand curve, a price increase will:


Question:
XYZ coop has net savings of $50,000.  The coop has an IRS classification of non-exempt.  There were 10 users of the coop, 5 members and 5 non-members.  Each did an equal share of the business.  The coop is in the 50% tax bracket.  How much patronage dividends are due each member?


Question:
Miss Q is a member of XYZ coop.  How much of Miss Q's patronage dividends does the IRS require the XYZ coop to pay in cash the year in which they were earned?


Question:
If the price of good A goes up, the quantity consumed of good B (a complement) should:


Question:
If you are normally a long hedger with traditional futures and you want to hedge with an option, you would:


Question:
A cattle feeder has bought some feeders and placed them on feed. He plans to bring them out of the feedlot as fed cattle in about 150 days.  He only has enough grain storage for 50 days, so he decides to hedge his future grain purchases.  He would:


Question:
Mr. Martin buys an "at-the-money" put on December wheat futures. The strike price is $4.00 and the premium is 10 cents.  The last trading day of the option finds the December wheat futures at $3.60.  What will the premium on Mr. Martin's $4.00 strike price be trading for?

B:
Will probably have no value, or very close to zero.


Question:
Miss Roberts has decided to try hedging.  She produces corn. After she plants she sees the cash corn trading at $4.00 and the December futures at $4.50.  She plans to harvest in November.  She places the hedge.  In November, she sells the cash corn for $5.00 and lifts her hedge at $5.10.  What is her net hedge price?


Question:
Mr. Jones runs a country elevator.  He has purchased some corn for $4.00 and has properly hedged it with a December futures at $4.40.  Two weeks later he sells the corn for $3.90 and lifts his hedge at $4.00.  Mr. Jones hedged by initially:


Question:
New Mexico and several other (primarily Western) states presume that income received by one spouse or property purchased by a married couple is equally shared by each spouse.  This system of property ownership, historically based on Spanish law, is called:


Question:
Most states presume that whatever one spouse earns belongs to that spouse alone and any property purchased by one spouse belongs to that spouse alone. (This presumption is not true in New Mexico, which assumes each spouse shares equally.) This system, based on English law, is called:


Question:
The financial statement which reconciles beginning net worth, net income for the intervening period, and ending net worth, for an unincorporated business, is:


Question:
The primary factors that shift a demand curve are:

A:
Consumer income, tastes and preferences, population, and price and availability of substitutes

B:
Market price of the commodity and consumer income

C:
Price of the input, taste and preferences

D:
Population, consumer income and market price of the commodity


Question:
The Truth-In-Lending Act clearly specifies that:

A:
Agricultural loans must be reported to USDA.

B:
Discount method of computing interest is illegal.

C:
APR must be computed and displayed prominently.

D:
Agriculture liens must be recorded by the Secretary of State.


Question:
Farmers are allowed to use the cash method of accounting for income tax reporting purposes because:

A:
Farmers aren't quite smart enough to figure out the accrual method.

B:
Because the cash method prepares a better long-run estimate of farm profitability than does the accrual method.


Question:
Under the remaining balance method of computing interest:


Question:
Under the add-on method for calculating interest:


Question:
Which of the following is a prepaid expense?


Question:
Which of the following is an accrued liability?

A:
Interest on a loan that has not yet been paid.

B:
Wages earned by employees that have not yet been paid.

C:
Interest on a loan taken out last year due at the bank next month.


A:
Current Liabilities divided by Current Assets.

B:
Assets divided by Liabilities for the current year.

D:
Current Assets divided by Current Liabilities.


Question:
Which of the following is NOT an advantage of a fixed price forward contract sale?

C:
Delivery of specified quantity is required.


C:
Leverage Assets divided by Total Assets.

D:
Total Liabilities divided by Total Assets.


A:
The value of money received relative to its cash equivalency.

B:
The amount of money received tomorrow relative to it's current value.

C:
Money received evenly throughout the year.


Question:
An equal total payment plan for repayment of a loan:

C:
Provides for equal amounts of principal payments.


A:
An operating loan that may be borrowed, repaid, and then reborrowed

B:
An operating loan that may not be borrowed, repaid, and then reborrowed.

C:
The borrower must repay the outstanding balance each month.

D:
A strip of credit manufactured by Winchester.


Question:
Farmer Buzz owes the bank $2,000, but the most that he can give the bank is $1,100.  If Buzz's loan balance prior to payment was $5,000 principal and $500 accrued interest, what is his principal after the payment?


Question:
Farmers often lease farm machinery rather than buy it.  By leasing, they can:

A:
Avoid showing the cost of using the machinery when preparing an income statement.

B:
Avoid listing a liability on their balance sheet.

C:
Avoid excess taxation through depreciation.

D:
Avoid large capital outlays to gain the service of the machinery.


Question:
Farmers often use trusts and wills in developing estate plans. They do so because:

A:
They wish to pass most of their estate on to their heirs and avoid estate taxes.

B:
They wish to avoid income taxes now even if taxes are higher later.

C:
They want to show their trust in the government.


Question:
Government price support programs for feed grains (including corn, grain sorghum, oats and barley):

C:
Are mandatory for all producers of feed grains.

D:
Are voluntary for farmers to choose whether to participate.


Question:
American agriculture is the world's largest commercial enterprise with assets exceeding:


Question:
The financial ratio that represents the interest rate being earned in the farm business.


Question:
What percentage of Americans work in some area of agriculture?


Question:
Lenders may require a cash flow analysis to:

A:
Determine the profitability of the farm operation.

B:
Collect data to complete the net worth statement.

C:
Determine the machinery investment per acre.


Question:
During 20X1, Ernie's Dairy cash flow budget projects total cash iinflows of $2,213,729 and total cash outflows of $2,306.638.  The farm will have a:


Question:
Farmer Brown has wheat in her storage bins and decides that she does not want to absorb the risk that prices may decrease over the next few months.  She could transfer that risk by:


Question:
George wants to speculate that cattle prices will increase.  He could (best answer):


Question:
An option on a futures contracts allows the buyer of the option:

A:
The right but not the obligation to buy or sell a futures contract.

B:
The obligation to buy or sell a futures contract.

C:
The obligation to deliver a futures contract.


Question:
A term debt coverage ratio of 1.5:1 or 150% indicates:

A:
Sufficient cash to cover only current farm debt payments.

B:
Sufficient cash to cover only non-farm debt payments.

C:
Lack of cash to cover all term (farm and non-farm) debt payments.

D:
Sufficient cash to cover all term (farm and non-farm) debt payments.


Question:
The major factor determining a farmer's or rancher's decision making under risky conditions is:

B:
The credit allowance given the farm or ranch business by the bank.


Question:
Which of the following appraisal methods does not use other farm or ranch sales to indicate the value of the subject property?


Question:
What determines the shape of the production possibility curve?

A:
The price of the products considered for production.

B:
The price of the inputs used in production.

C:
The shape of the underlying production functions.


Question:
Consider two feeds that can be used in a ration formulation: soybean meal and cotton seed.  An increase in the price of cotton seed relative to the price of soybean meal would:

A:
Increase the amount of soybean meal used in the ration.

B:
Increase the amount of cotton seed used in the ration.

D:
Decrease the amount of soybean meal used in the ration.


Question:
The law of diminishing marginal returns suggests that as more input is added with all other inputs fixed:

A:
The input added eventually replaces more and more of the other input.

B:
Total Physical Product (TPP) will eventually reach a maximum.

C:
Marginal Physical Product (MPP) will eventually reach a maximum.

D:
Average Physical Product (APP) will eventually reach a maximum.


Question:
What would be the best measure to use for comparing the profitability of two farms?


Question:
The average total cost of producing units of output can be found by:

A:
Setting marginal revenue equal to marginal cost.

B:
Dividing total fixed cost by the amount of output produced.

C:
Dividing total variable cost by the amount of output produced.

D:
Dividing total cost by the amount of output produced.


Question:
The major advantage of renting or leasing over purchasing land or machinery is to:


Question:
Current assets minus current liabilities is:


Question:
The number of acres of wheat to be grown this year is projected to be down and some think we could run out of wheat before the next crop.  Bill has already forward contracted his wheat for this year, how could he possibly take advantage of the possible shortage?


Question:
A farmer using the accrual system of accounting purchases gasoline on credit. The purchase of gasoline:

A:
Should not be recorded since it has not been paid for.

B:
Should be recorded as a liability with no other entries made.

C:
Should be recorded as an expense with no other entries made.

D:
Should be recorded as an expense and also as a liability.


Question:
The price of beef is determined by the supply of beef and demand for beef.  A change in price occurs when the demand for beef increases or decreases even though the supply remains constant.  Which of the following causes a change in demand for beef?


Question:
Commercial fertilizer should be applied to a crop as long as:

A:
The added fertilizer increases yields per acre.

B:
The added fertilizer costs less than the first unit of fertilizer applied.

C:
The added fertilizer increases gross farm income.

D:
The added fertilizer returns more than the added cost of the fertilizer.


Question:
In preparing a cash flow plan, one should NOT include which expense items?

D:
Family living and other non-farm expense.


Question:
The objective of determining repayment capacity of a farm or ranch business should be:

A:
To determine 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 the farmer's equity capital.

D:
To project the net worth of the business for the end of the year.


Question:
The demand for a product is said to be perfectly inelastic if:

A:
A decrease in price is accompanied by an increase in the quantity demanded.

B:
A decrease in price is accompanied by a decrease in the quantity demanded.

D:
Consumers are indifferent to a per unit price change.


Question:
The steers that Joe plans to fee out this year look to make record profits.  To take advantage of this, he should at this time:


Question:
Which of the following statements is NOT one of the three tests the Internal Revenue Service applies when looking at prepaid farm expenses?

A:
The expenditure must be a payment, not a deposit.

B:
The farmer must not be using the cash basis method of accounting.

C:
The payment must not materially distort the farmer's income.

D:
The payment must have a valid business purpose and not be made to avoid taxes.


Question:
Marketing is the performance of all business activities involved in the flow of goods and services from the point of initial production until they are in the hands of the:


Question:
When the price of milk is $10 per cwt., producers produce 10 million pounds.  When the price increases to $12 per cwt., producers increase production to 20 million pounds.  Over this price range, the supply elasticity of milk with respect to price is:


Question:
At the beginning of last year, you had an outstanding loan for $90,000.  The loan carries an interest rate of 12% annual percentage rate.  You make one loan payment at the end of the year for $25,400. What is the outstanding balance at the beginning of this year?


Question:
If demand and supply increased equally for an agricultural product, the results would be:

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 higher price.

D:
An increased quantity will be sold at the same price.


Question:
If the strong dollar reduces the demand for U.S. wheat exports, then we can expect the market price for wheat in the United States to:

D:
Increase or decrease depending of the amount of the demand decrease.


Question:
Liability of a general partner in a partnership is limited to:

A:
All debts and obligations of the partnership up to the amount of investment in the partnership.

B:
Maximum of 50% of obligations of the partnership.

C:
All debts and obligations of the partnership.

D:
All debts and obligations of the partnership up to the amount of the share of the assets in the partnership.


Question:
If we want to consider the time value of money in considering alternative farm investments, we should choose the investment with:

B:
The most total profits over the lifetime of the investment.

C:
The highest average profits over the investment lifetime.


Question:
If wheat and corn are common substitutes as an input into livestock feed, then an increase in the market price for corn is expected to:


Question:
When a farmer increases his investment in land, buildings, and equipment without increasing the total units of production, the cost per unit of production:


Question:
The amount of a member's patronage dividends from a cooperative are based upon:

A:
How long the member has been in the cooperative.

B:
The amount of capital stock the members owns.

C:
The volume of business the member does with the cooperative.

D:
The total liabilities of the cooperative.


Question:
Marginal revenue and marginal cost are useful concepts in estimating 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 equal to zero.

B:
Where marginal revenue is equal to zero and marginal cost is at its maximum.

C:
Where marginal revenue is equal to marginal cost.


Question:
A farmer wants to project the returns per acre from producing corn on his farm.  The best method to determine returns would be to use:


Question:
Purchase of a call option on corn means:

A:
The buyer is required to sell a corn futures contract at a set price.

B:
The buyer may but is not required to sell a corn futures contract at a set price.

C:
The buyer may but is not required to buy a corn futures contract at a set price.

D:
The buyer is required to buy a corn futures contract at a set price.


Question:
The best indication of the dollar amount that a farmer has for family living expenses for making loan repayments, and for making additional investments would be:


Question:
Corn yields 90 bushels per acre and has a production cost of $140 per acre.  Current market prices are $2.50 per bushel for corn and $6.00 per bushel for soybeans.  Soybeans can be raised at a production cost of $110 per acre.  At what breakeven yield per acre would soybeans generate the same net return per acre as corn?


Question:
It is profitable for a farmer to borrow money to expand his farm business when the borrowed money:

C:
Returns more than the cost of borrowing money.


Question:
The return an input would have earned in its best alternative use is called its:


Question:
Accrued interest on a balance sheet refers to:

D:
Interest that has accumulated since the last loan payment.


Question:
Which of the following actions would reduce income taxes for a cash basis taxpayer?

B:
Decrease the value of grain in inventory.

D:
Take Section 179 expensing on a newly purchased tractor.


Question:
The difference between the price of a commodity in the nearby futures market and the local cash price is called:


Question:
Rate of return on investment for a farm business is found by:

A:
Dividing total asset value by total liabilities.

B:
Subtracting total liabilities from total asset value.

C:
Dividing return to capital by total asset value.


Question:
Which of the following is an operating expense?


Question:
A producer had 100 head of 550 pound steers.  She could sell them for $80 per hundredweight or feed them in a custom feedlot which guaranteed the feeder a $.60 cost per pound of gain.  What price per hundredweight would the producer have to receive for the finished cattle to equal the offer she had when they weighed 550 pounds? (Assume she planned to feed them to weight of 1100 pounds)


Question:
The money deposited with a broker to trade futures contracts is called:


Question:
Which of the following lists cash receipts and expenditures of a farm during a specified time period?


Question:
Repayment capacity is best measured by the:


Question:
If the government were to set the price of milk at an artificially high price, what is likely to occur?


Question:
There is a significant difference between which of these terms?


Question:
If a tractor's use is increased from 300 to 400 acres per year its:

C:
Average fixed cost per acre will decline.


Question:
The purpose of income tax management is:


Question:
When adding another enterprise to an existing farm organization, a farmer should choose the enterprise which:

B:
Will show the highest net returns to the available resources.

C:
Will produce the largest increase in gross cash receipts.


Question:
A type of loan agreement in which the lender can require payment in full at any time is called:


Question:
The three R's (risk, returns, and repayment) are frequently evaluated to determine a farmer's:


Question:
The government can stabilize grain prices with grain reserves by:

B:
Reducing the quantity of grain available for export.

C:
Placing grain research locations where hungry people live.

D:
Releasing supplies in low production years and absorbing supplies in high production years.


Question:
You have been hired as manager of a large cash grain farm.  The corn yields have averaged 120 bu/acre while the soybean yields have averaged 35 bu/acre.  Production costs for corn are $180/acre and production costs for soybeans are $140/acre.  If the corn price is $2.25/bu, what soybean price is required so that net returns for soybeans equals that of corn?


Question:
When a reduction in the level of production of one enterprise causes an increase in the level of production of another enterprise, these two enterprises are:


Question:
A farmer plans on buying 20 tons of soybean meal in May of next year.  The meal will be fed to the dairy herd throughout the year. It is now August and the farmer expects the price of soybean meal to increase significantly by next May.  What should the farmer do to provide protection from the increasing price of soybean meal?

A:
Buy August soybean meal futures contracts

B:
Sell May soybean meal futures contracts today, expecting to buy them back in August

C:
Sell August soybean meal futures contracts today, expecting to buy them back in April

D:
Buy May soybean meal futures contracts today, expecting to sell them in May


Question:
A farm manager is considering storing his corn until spring instead of selling the corn at harvest in the fall.  Assuming that he already has storage facilities on this farm, which of the following factors should he consider when making this decision?

A:
Production costs per bushel of stored corn

B:
Storage costs charged by the local grain elevator

C:
Annual fixed costs of the storage facilities

D:
Interest foregone and shrinkage by not selling the crop at harvest


Question:
In developing an enterprise budget the farmer's own labor should be:


Question:
Which financial statement explains cash balance changes between the beginning and ending balance sheet?


Question:
A partial budget is useful to a farmer in estimating:

A:
Profitability of a change in normal operations


Question:
A farmer has $10,000 in equipment used exclusively for corn production. The equipment will last for 5 years and have a salvage value of $0. The farmer plans to plant 120 acres of corn each year. Assuming an interest rate of 8%, what will be the average fixed costs per year for the next five years (depreciation and interest) for this machinery per acre of corn production?


Question:
John Murray and Raleigh Jobes have a partnership. Raleigh decides that the farm needs two new tractors, so he borrows the money needed from the bank and buys them without telling John.  The partnership then goes out of business.  Who is responsible for the debt incurred on the tractors?

A:
Only Raleigh is because he bought the tractors.

B:
Neither are because the bank cannot collect from a business which no longer exists.

C:
The bank can sell the partnership assets, but cannot hold either Raleigh or John personally responsible.

D:
Both Raleigh and John are jointly and personally responsible for the partnership debts.


Question:
The net income that could have been received if the input had been used in its most profitable alternative is:


A:
Profits when prices decrease, loses when prices increase

C:
Profits when prices increase, loses when prices decrease


Question:
A livestock producer using futures market contracts to forward price cattle would initially:

A:
Buy futures contracts expecting to buy more contracts when he sells his cattle.

B:
Buy futures contracts expecting to sell 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


Question:
When adding an enterprise to an existing farm organization, a farmer should choose the enterprise which:

B:
Produces the highest net returns to the available resources

C:
Produces the largest increase in gross receipts


Question:
A ranch business accounting period for July 1, 20X1 to June 30, 20X2 would be an example of what type of accouting period?


Question:
A farmer traded a tractor with an adjusted tax basis of $5,000.  The new tractor had a list price of $50,000.  The dealer allowed a $20,000 trade-in for the old tractor.  The farmer paid $10,000 of his own money and borrowed $20,000 to pay the balance.  What is the tax basis of the new tractor?


Question:
Up to harvest time a farmer has spent $27.60 per acre for labor, seed, and machine costs on oats.  Price of oats has fallen, and a severe drought has reduced his yields.  The expected price of oats at harvest is $1.50 per bushel and the expected yield is 9 bushels per acre.  What is his best alternative?

A:
Assume a $27.60 per acre loss for the year and leave the oats in the field.

B:
Harvest the oats crop assuming a $14.00 per acre harvest cost.

C:
Sell the standing oats as pasture for $4.50 per acre.

D:
Sell the standing oats for hay for $6.00 per acre.


Question:
A farmer has installed a new confinement feeding system for cattle. If the price of market cattle suddenly drops, he should:

A:
Stop feeding grain and finish on pasture and roughages.

B:
Stop feeding cattle and convert the building to a swine finishing house.

D:
Continue feeding cattle as long as variable costs are covered.


Question:
Which of the following is a measure of financial liquidity?

D:
Current assets minus current liabilities


Question:
If the tonnage of hay baled by a custom operator decreases by 50%:

A:
The total cost per ton of hay baled should also decline 50%.

B:
The total cost per ton of hay baled should increase.

C:
The total cost per ton of hay baled should not change.

D:
The variable cost per ton of hay baled should increase.


Question:
A tenant has a crop share lease for 200 acres.  The landlord has recently informed the tenant that he wants to change to a cash rent arrangement.  Which of the following is most likely to be a reason for the landlord wanting to make the change?

A:
Improve the soil conservation practices used on the 200 acres.

C:
Increase the landlord's involvement in marketing and production for the 200 acres.

D:
Decrease the landlord's risk from variation in crop yields and variation in product price.


Question:
A cattle feeder is interested in forward pricing (hedging) his cattle on feed which should be ready for market on August 1.  What action would the cattle feeder take in the futures market in April after he buys cattle?


Question:
Most assets require more maintenance as they grow older.  This is reflected in the cash flow statement by:


Question:
When an increase in the level of production of one enterprise causes a reduction in the level of production of another enterprise, these two enterprises are:


Question:
Mr. Banks is considering purchasing a parcel of land.  He decided to use the adjusted income capitalization approach to estimate the land's worth.  He estimated the annual net income to the land to be $90,000 and his opportunity cost of capital is 12%.  How much could he pay and realize a return equal to his opportunity cost of capital?


Question:
If the industry demand of a commodity is inelastic:

A:
Less is produced by the industry, total industry revenue will increase.

B:
More is produced by the industry, total industry revenue will increase.

C:
The price of the commodity increases, industry revenue will decrease.

D:
The price of the commodity decreases, industry revenue will increase.


Question:
Which financial statement explains owner equity changes between the beginning and ending balance sheet?


Question:
A cattle feeding operation has sales of $70,000, feed purchases of $7,000, other costs of $45,000, opening inventory of $30,000, and a closing inventory of $36,000.  What is the net farm income to this operation?


Question:
Which financial statement lists the cash and non-cash revenues and expenses of a farm during a specified period of time?


Question:
Identify a strategy to improve the term-debt coverage ratio.

A:
Decrease net farm income from operations.

B:
Reduce farm business operating expenses.


Question:
You have been hired as manager of a large cash grain farm.  The corn yields have averaged 180 bu/acre while the soybean yields have averaged 50 bu/acre.  Production costs for corn are $250/acre and production costs for soybeans are $165/acre.  If the corn price is $2.35/bu, what soybean price is required so that net returns for soybeans equal that of corn?


Question:
All of the process and services involved in moving a commodity from the producer to the ultimate consumer.  The activity involved in buying and selling a product.


Question:
You have been hired as manager of a large cash grain farm.  The wheat yields averaged 85 bu/acre while the barley yields have averaged 50 bu/acre.  Production costs for wheat are $150/acre and production costs for barley are $145/acre.  If the wheat price is $3.00/bu, what barley price is required so that net returns for barley equal that of wheat?


Question:
The sale of cull cows (either dairy or beef) will be reported to the IRS on form:


Question:
Banks Farms have historically forward contracted the price they receive for the crops they have grown.  They plan to continue to forward contract, but they would like to obtain the benefits if prices increase.  Which of the following alternatives should they consider?


Question:
In futures contract trading the difference between the local cash market price and the price of the near term (expiring) futures contract is:


Question:
Which financial statement lists assets, liabilities and owner equity at a particular time?


Question:
The selling of a commodity futures contract to protect a producer from price fluctuations in the marketplace at the time the product is sold.  Insures against substantial loss, but also prevents windfall gains.


Question:
In futures contract trading, which of the following gives the owner the right to buy or sell a futures contract for a certain price, called the strike price, for a limited period of time?


Question:
After-tax ranch income over time will be greatest if:

B:
Net income shows huge variations from year to year

C:
There are no personal exemptions from year to year

D:
You hold off on larger capital purchases


Question:
Farm income and expenses are reported to the Internal Revenue Service (IRS) on:


Question:
An agreement to buy and receive or to sell and deliver a specific commodity at a future date and place.  The contract written by a commodity exchange includes the specific characteristics of the delivery.


Question:
A farmer's net worth statement showed the following balances: Current assets $20,000; Fixed assets $120,000; Current liabilities $20,000; Long-term liabilities $75,000.  The farmer's debt-to-equity ratio is:


Question:
A farmer's net worth statement showed the following balances: Current assets $20,000; Fixed assets $120,000; Current liabilities $20,000; Long-term liabilities $75,000.  The farmer's equity/asset ratio is:


Question:
A farmer's net worth statement showed the following balances: Current assets $20,000; Fixed assets $130,000; Current liabilities $20,000; Long-term liabilities $85,000.  The farmer's debt/asset ratio is:


Question:
Farmer Mac owes the bank $2,000, but the most that he can give the bank is $1,500.  If Mac's loan balance prior to payment was $7,000 principal and $700 accrued interest, what is his balance after the payment?


Question:
Products have _________ to consumers if they meet a need and in the process provide satisfaction.


Question:
The primary difference between buying a milk futures contract and buying a put or call option for milk is:

A:
They are the same -- both are subject to margin calls

B:
The cost of the option is a fixed cost, but the futures contract is subject to margin calls

C:
The cost of the futures contract is a fixed cost, but the option is subject to margin calls.

D:
Neither is subject to a margin call and therefore they accomplish the same task


A:
Is sometimes called a production possibilities frontier because production outside the curve is not possible with the given resource

B:
Will be a straight line, on the typical diagram, if one product is a perfect substitute for another.

C:
Is bowed out because resources and technologies are not completely substitutable in production.

D:
Has characteristics that conform to each of the statements above.


Question:
According to the concept of opportunity cost, or costs:

A:
There is always an opportunity cost for everything that is produced.

B:
The cost of producing something cannot be expressed in terms of the value of the opportunities that are foregone.

C:
There is no connection between opportunity cost at a given level of output and the law of increasing (relative) cost.

D:
The real costs of production include explicit costs but not the implicit opportunity cost.


A:
The average physical product (APP) reaches its maximum before the marginal physical product (MPP) reaches its maximum.

B:
The phase of increasing returns continues until the APP reaches its maximum.

C:
Diminishing returns begins where the APP is at its maximum.

D:
As long as the APP is increasing, the MPP must be greater than the APP.


A:
If it pays to produce at all it will pay to produce at least as long  as MPP exceeds APP.

B:
The only rational stage of production occurs within the range of decreasing returns.

C:
Production within stage III is irrational.


Question:
Competition must exist among enterprises when:

A:
They use the same resources at different times.

B:
The output of one is increased by increasing the output of another.

C:
The output of one can be increased only by reducing the output of another.

D:
The output of one is independent of the output of another.


A:
The fixed cost is zero when output is zero.

B:
Total costs rise as output is carried to a certain level, and then begin to decline even though output may still increase.

C:
Average costs rise as more and more resources are used, and then begin to decline after reaching their maximum.


Question:
The opportunity cost of an additional unit of variable input is always the:

A:
Market price of that input at the time it is used.

B:
Market price of that input at the time it was purchased.

C:
Return obtainable from the best available alternative use of that input.

D:
Total variable cost divided by the number of units of the input that are used.


Question:
The location or shape of the marginal cost curve:

A:
Is dependent on the location or shape of the AFC curve.

B:
Is a consequence of increasing and diminishing returns.

C:
Will be rising when there is a rising marginal product.

D:
Is horizontal when marginal product is zero.


Question:
What is the most typical type of competition in the farm sector?


Question:
In a monopoly, or a monopoly-like situation:

A:
There are only a few close substitutes for the product.

C:
There is generally no government control of price, or output.


Question:
In the short run, the decision of the firm in pure competition to produce or not depends on whether or not:


Question:
The determinants of supply for an agricultural commodity under given  weather conditions include all the following except the:

B:
Prices of the resources used in production.


Question:
Once the market for a farm product is in equilibrium:

A:
There cannot be a change in quantity supplied without having a change in supply.

B:
A change in supply can occur without there being a change in quantity supplied.

C:
A change in supply and in quantity supplied must arise from the same source.

D:
There cannot be a change in quantity supplied without there being a change in demand.


Question:
Supply curves of agricultural products are upward sloping because of:

B:
Diminishing marginal utility of farm products.

C:
Decreasing marginal costs of agricultural firms.


Question:
The demand curves for most agricultural products are downward sloping because:

A:
Of the law of diminishing marginal utility.

B:
The demands for resources (MRP curves) are downward sloping.

C:
Agriculture is a decreasing cost industry.

D:
Marginal physical product (MPP) curves are generally downward sloping.


Question:
The law of diminishing marginal utility is based on the idea that although wants in general may be insatiable:

A:
Wants for specific goods or services tend to diminish over time.

B:
People have diminishing wants for any product or service as more and more other products are acquired.

C:
Wants for specific goods and services can be fulfilled.

D:
People tend to diminish their purchases of a commodity as the price rises higher and higher.


Question:
The determinants of demand for a commodity include all except:


Question:
An example of a change in quantity supplied of a certain agricultural commodity, in contrast to a change in its supply, would be a change in quantity produced resulting from a change in:


Question:
If the demand for wheat increases, other things remaining the same, which of the following would not be a logical consequence?  An increase in the:

C:
Quantity of resources supplied to produce wheat.


Question:
If the supply of feed grains increases, other things remaining the same, which of the following would be a logical consequence?  A reduction in the:

D:
Supply of resources to produce feed grains.


Question:
If the price of wheat rises sharply when (a) a prolonged dry spell reduces the yield per acre and (b) wheat millers seek to stockpile wheat to protect themselves from future price increases, the situation involves:

A:
A reduction in supply and a movement along the demand curve.

B:
Movements along both supply and demand curves, rather than a shift in either curve.

C:
An increase in demand and a movement upward on the given supply curve.

D:
Shifts in both the supply and demand curves.


Question:
Elasticity of demand for a farm commodity refers to:

A:
How much the demand curve will shift when there is a change in the price of the commodity.

B:
The percentage change in equilibrium price when there is a given change in market demand.

C:
The percentage change in quantity demanded associated with a given percentage change in price.

D:
The percentage change in total market receipts associated with a certain percentage change in price.


Question:
Which of the following statement(s) is (are) true?

A:
Generally speaking, demand tends to be more inelastic for a necessity than a luxury.

B:
The relative importance of a given food in the family budget tends to be related inversely to its elasticity of demand.

C:
Generally, the longer the time allowed for an adjustment to a change in price of a farm commodity, the less elastic the demand.

D:
Generally speaking, the elasticity of demand for a given resource is not related to the elasticity of demand for its product or products.


Question:
Farmer cooperatives in the United States:

A:
Have generally been organized to carry out a business operation under farmer-member control.

B:
Have been most successful as large regional or national bargaining associations.

C:
Tend to conform to the model of pure competition rather than oligopoly and oligopsony.

D:
Generally have more than half of the total market share in both farm service supply and processing marketing industries.


Question:
What does a term debt and capital lease coverage ratio equal to 1.75 show about ability to cover all non-current (farm and non-farm) debt payments?

A:
The ratio indicates the farm business has $1.75 for each $1 of total revenue.

B:
The ratio indicates the farm business has $1.75 for each $1 of debt payment.

C:
The ratio indicates the farm business does not have enough cash to cover debt payments.

D:
The ratio indicates the farm business does not have enough cash to cover family living.


Question:
After advertising your old car in the paper for a few days, you finally sell it to a buyer for just a little bit less than your asking price.  You feel that you really got a good deal; therefore:

B:
The price you sold the car for must have been too high.


B:
Is too high if consumers aren't able to buy all of the good that they want to buy.

C:
Could automatically increase if there were a shortage in a competitive market.


Question:
In a competitive market at a price of $4 per yo-yo, the quantity supplied of yo-yos is 216 and the quantity demanded is 244.  As trading continues,

A:
The price will increase, the quantity demanded will increase and the quantity supplied will decrease.

B:
The price will remain the same, the quantity demanded will decrease and the quantity supplied will increase.

C:
The demand curve will shift inward causing the quantity demanded and supplied to be equal.


Question:
A shift in the supply of hot dogs could be caused by:

A:
A change in the tastes and preferences of consumers.


Question:
Which of the following would cause the demand for feed corn to shift?

B:
An outward shift in the supply of feed corn.


A:
Each producer is so small that the firm is insignificant relative to the market.

B:
There are no limits to the entry or exit of producers into the market.

C:
Each consumer is so small that he or she is insignificant relative to the market.


Question:
An outward shift of the supply curve for peanuts would NOT cause:


Question:
In a purely competitive market, all buyers and all sellers:

A:
Are satisfied with the equilibrium price.


Question:
An increase in the price of onions could be caused by:

A:
An inward shift of the onion supply curve.

B:
An outward shift of the onion demand curve.

C:
An outward shift of the onion supply curve.


Question:
Which of the following would cause the price of oats to increase?


Question:
So long as Marginal Physical Product is increasing:

A:
Total Physical Product is increasing at an increasing rate

B:
Total Physical Product is increasing at a decreasing rate


B:
Total Physical Product is increasing ant a decreasing rate


A:
Total Cost is increasing at a decreasing rate.

B:
Total Cost is increasing at an increasing rate.


Question:
This firm's supply function is identified by:

D:
That part of marginal cost which lies above average variable cost.


Question:
For the individual firm, profits will increase if which of the following occur?


Question:
The point where total physical product ceases to increase at an increasing rate and begins to increase at a decreasing rate defines the point at which:

D:
Average physical product and marginal physical product are equal.


Question:
The point where the production function has the greatest possible slope defines:

B:
The point of diminishing marginal returns

D:
The point where marginal cost and marginal revenue are equal.


A:
Lies where marginal physical product is positive but is less than average physical product.

B:
Begins where marginal cost and marginal revenue are equal

C:
Lies where average physical product is zero

D:
Ends where average physical product is zero.


Question:
The point of diminishing marginal returns occurs where:

B:
Total physical product ceases to increase at an increasing rate and begins to increase at a decreasing rate.


Question:
Which of the following will cause a movement along the supply curve for corn?

B:
A more productive hybrid corn variety is developed


Question:
Given a variable resource, X, and a product, Y, which of the following conditions will result in maximum profits?

A:
Operate where the price of X is equal to the value of marginal product.

B:
Operate where the price of Y is equal to the marginal cost

C:
Operate where marginal revenue is equal to marginal cost


Question:
The quantity of resources available for the production of goods and services is:

D:
Of no particular consequence as far as economics is concerned.


A:
Are always expressed in dollars and cents.

B:
Do not exist for free goods and services.

D:
Exist in all situations in which resources are relatively scarce.


Question:
Opportunity costs may be defined as the:

A:
Goods or services that are forgone in order to obtain something else.

B:
Dollar prices paid for final goods and services.

C:
Dollar cost of producing a particular product.

D:
Difference between wholesale and retail prices.


Question:
With regard to opportunity costs, which of the following statements is false?

A:
Opportunity costs exist in all situations where available resources are not abundant enough to satisfy all individual and social wants.

B:
Opportunity costs are relevant only in personal decision making, not  to the decisions affecting the entire economy.

C:
Opportunity costs entail the making of sacrifices.

D:
Opportunity costs necessitate the making of individual and social choices.


Question:
Economic efficiency and opportunity costs are related in that:

B:
Economic efficiency is maximized when opportunity cost is minimized.

C:
Neither can be expressed quantitatively.


Question:
The market demand curve shows that price and quantity demanded are:


Question:
The market demand curve for a particular good indicates:

A:
That consumers will purchase more of the good at higher prices, all other things held equal.

B:
That sellers will offer more of the good only at higher prices, all other things held equal.

C:
The total quantities that buyers are willing and able to purchase at alternative prices, all other things held equal.

D:
How much of the good is actually purchased in a given period of time.


Question:
When marketing milk, you decide to roll up to a higher floor price.  Which of the following would you do?

C:
Sell back the first put option and buy a higher put option.

D:
Sell back the first put option and buy back a lower put option.


Question:
A change in market demand for good X does not result from a change in:


Question:
The demand for good X would be expected to increase if:

B:
Consumers expect lower prices for good X.

D:
Tastes and preferences shift in favor of good X.


Question:
A movement downward along a demand curve between two prices indicates:


Question:
A shift in the market demand curve toward the left indicates:


Question:
A shift in the market demand curve toward the right means that:

A:
Consumers are willing and able to purchase greater quantities of good X at each of various prices than they were before.

D:
The quantity demanded of good X has decreased.


Question:
To say that the demand for good X has increased means that:

A:
The price of good X has fallen, and a greater quantity of good X is demanded.

B:
The demand curve has shifted to the left.

D:
Consumers are willing and able to purchase at any given price larger quantities of good X than before.


Question:
Graphically, a decrease in demand is shown as a:

B:
Movement downward on the demand curve between two prices.

C:
Movement upward on the demand curve between two prices.


Question:
A shift in the market supply curve to the left means that:

A:
Sellers are willing and able to offer greater quantities of good X at each of various prices than they were before.

D:
Sellers are willing and able to offer smaller quantities of good X at each of various prices than they were before.


Question:
A shift in the market supply curve to the right indicates:


Question:
A movement upward along a supply curve between two prices indicates:

C:
That buyers are willing and able to purchase greater quantities at all possible prices.


Question:
An increase in the quantity supplied is shown graphically as:

C:
An upward movement along the supply curve between two prices.

D:
A downward movement along the supply curve between two prices.


Question:
To say that the supply of good X has decreased means that:

A:
Consumers are willing and able to purchase at any given price fewer quantities of good X than before.

C:
There are fewer producers of good X than before.

D:
Sellers are willing and able to offer at any given price smaller quantities of good X than before.


A:
Is the same price that currently exists in the market.

B:
Would satisfy all consumers' buying intentions.

C:
Would always lead to surpluses or shortages.

D:
Is the only price at which the quantity demanded is equal to the quantity supplied, other things being equal.


Question:
The equilibrium price in a competitive market:

B:
Equates the buying intentions of buyers with the selling intentions of sellers.

C:
Would remain unchanged as long as supply and demand are unchanged.


Question:
If there is a shortage of a product in a competitive market, we can infer that its market price is:


Question:
When a competitive market is in equilibrium:

C:
Firms have an incentive to raise or lower price.


Question:
If there is a surplus of a product in a competitive market, we can infer that the market price:

B:
Is controlled by a government-mandated price freeze.

D:
Has been fixed by firms acting in collusion.


Question:
A market is said to be in equilibrium when:

A:
Demand is fully satisfied at all alternative prices.

B:
The buying intentions of all consumers are realized.

C:
The supply intentions of all sellers are realized.

D:
The quantity demanded equals the quantity supplied.


Question:
According to the law of demand, a change in the price of product X will:

A:
Result in a change in the demand for product X.

B:
Not have predictable effects on the quantity demanded.

C:
Result in a change in the quantity demanded of product X.

D:
Result in a change in the quantity supplied of product X.


Question:
Which of the following will not change the demand for product X?

B:
A change in consumer tastes for product X.


Question:
The difference in the futures price and local price is called:


Question:
Each of the following results in a shift of the demand curve except a change in:


Question:
To say that the demand for a product has decreased means that:

A:
Less of the product is being supplied at any given price.

B:
The quantity demanded at any given price is less than before.

C:
The demand curve has shifted to the right.

D:
The quantity demanded at any given price is greater than before.


Question:
For most goods, an increase in consumer incomes over time will tend to:

B:
Shift the demand curve to the left for those goods.

C:
Discourage greater purchases of those goods at any given price.


Question:
Other things being equal, if the demand curve for product X shifts to the left as the price of product Y increases, we can conclude that:

A:
X is a complementary good; Y is a substitute good.


Question:
Other things being equal, if the price of coffee increases significantly, the:

A:
Demand for coffee substitutes will decrease.

C:
Demand for coffee substitutes will increase.

D:
Quantity demanded of coffee will increase


Question:
The price elasticity of demand is a measure of:

A:
The quantity of a good demanded at a given price.

B:
The unit change in demand in response to a unit change in price.

C:
The percentage change in price in response to a change in the price of a substitute good.

D:
Consumer response to price changes of a good.


Question:
The price elasticity of demand is defined as the:

A:
Percentage change in quantity demanded times the percentage change in price.

B:
Unit change in price divided by the unit change in quantity demanded.

C:
Percentage change in quantity demanded divided by the percentage change in price.

D:
Unit change in quantity demanded times the unit change in price.


Question:
For downward-sloping demand curves, price elasticity of demand is always negative since:

A:
Price and quantity demanded move in opposite directions.

B:
Price and quantity demanded move in the same direction.

C:
Price changes are always expressed in negative percentage terms.

D:
Total revenue from the sale of X would decline if the price were reduced.


Question:
When the percentage change in quantity demanded is less than the percentage change in price:

A:
Demand is neither elastic nor inelastic.


Question:
If demand for a product is unitary elastic, raising its price a little will:

D:
Not change the total revenues from the product.


Question:
The demand curves for such products as cigarettes, coffee, and gasoline tend to be:


Question:
The demand for a product is likely to be more elastic if:

A:
The price of the product is low in relation to one's income.

B:
There are many good substitutes available for the product.

C:
The product is generally regarded as a necessity.

D:
The time period is short for consumers to adjust to a price change.


C:
Price per unit times the quantity of units sold.


Question:
To shift the demand curve, advertising must be successful in:

A:
Providing useful information to consumers.

C:
Changing consumer tastes and willingness to buy.

D:
Fulfilling consumers' expectations of utility.


Question:
Which of the following types of business enterprise is typically owned by large numbers of stockholders?


Question:
The technological relationship that expresses the maximum amount of a good attainable from different combinations of factor inputs is the:


A:
Shows the total cost of production per unit of output.

B:
Indicates the minimum amount of output attainable from a given quantity of resource inputs.

C:
Indicates the cost of output attainable from a maximum quantity of resource inputs.

D:
Indicates the maximum amount of output attainable from a given quantity of resource inputs.


D:
Obtaining inputs at lower resource prices.


Question:
The productivity of labor is usually increased when:

A:
More labor is used with given amounts of other inputs.

B:
Cheaper labor is used to replace expensive labor.

C:
A given quantity of labor is used with larger amounts of other inputs.

D:
A given quantity of labor is used with smaller amounts of other inputs.


C:
Promote inflation throughout the economy.

D:
Worsen productivity and resource efficiency.


A:
All resource inputs can be varied in quantity.

B:
There are both fixed and variable costs of production.

C:
The production function can be shifted in any direction.

D:
Output is a function of only the fixed inputs.


Question:
The change in total output associated with an additional unit of input is the:

D:
Rate of technical substitution of inputs.


Question:
When total output of good X is maximum in the short run:


Question:
As long as total output of good X increases:

B:
The marginal physical product is negative.

D:
The marginal physical product is positive.


Question:
The value, at this point in time, of income to be received at some future time.


Question:
Other things being equal, marginal cost declines:

B:
As long as marginal physical product increases.

C:
As long as marginal physical product declines.


A:
Explains the shape of the long-run Average Total Cost curve.

C:
Explains why average fixed costs decline.

D:
Explains why short-run Marginal Cost increases.


Question:
The increase in total cost associated with a one-unit increase in production is:


Question:
Given the price of variable input, marginal cost will increase if:

B:
Marginal physical product is increasing.


Question:
The value of all resources used in producing a good or service is expressed by:


Question:
At 100 units of output per period, average total cost is $20.  Total cost at this rate of output is:


Question:
Suppose that the total cost of producing 1,000 units per period is $50,000. At this rate of output, average total cost is:


Question:
Costs of production that do not change with the rate of output are:


Question:
Costs of production that change with the rate of output are:


Question:
Which of the following is an example of a variable cost?


Question:
The sum of average fixed cost and average variable cost at any rate of output is:


Question:
When output is zero, total costs are equal to:


Question:
Changes in short-run total costs result from changes in only:


Question:
At any given rate of output, the difference between average total cost and average variable cost is:


A:
Is intersected at its minimum point by marginal cost.

B:
Intersects the marginal cost curve's minimum point.


Question:
The average variable cost curve eventually slopes upward because of:

B:
The shape of the average fixed cost curve.

C:
The shape of the average total cost curve.


A:
Lies above the average total cost curve at all rates of output.

B:
Intersects the average total cost curve's minimum point.

C:
Lies below the average total cost curve at all rates of output.


Question:
At its minimum point, the average variable cost curve is intersected by:


Question:
Between any two given rates of output, if marginal cost is less than average total cost:


Question:
Between any two given rates of output, if marginal cost is greater than average total cost:


Question:
At the rate of output where marginal cost is equal to average variable cost:


Question:
Average total cost must equal marginal cost when:


Question:
The change in total cost for a one-unit change in output is:


Question:
The change in output for a one-unit change in a resource input is:


Question:
A calculation used to determine the current or present value of a cost or receipt expected in the future.  Adjusts for the time value of money.


C:
The difference between total revenue and taxes.


Question:
The Book Worm sells an average of seventy-five books a day.  If the average price per book is $10, total revenue per day is:


Question:
The Cotton Patch, a competitive firm selling cotton candy, has 50 customers a day on the average and daily revenues of $75.  The price  per unit sold of cotton candy is therefore:


Question:
The market demand curve for the output of a single competitive firm is:

A:
Vertical at the equilibrium market quantity.

B:
Horizontal at the prevailing market price.


Question:
If a firm can sell additional output at a constant price:

B:
It has a relatively large share of the market.


Question:
For the competitive firm, the marginal revenue of an additional unit of output is:


Question:
The demand curve confronting a noncompetitive firm is:

B:
Always downward-sloping because the firm's market share requires that price be reduced in order to increase unit sales.

C:
Always parallel to the total revenue curve.

D:
Usually, but not always, shaped like an inverted U.


Question:
If demand is perfectly elastic, a decrease in price will:

A:
Have no effect on either quantity demanded or total revenue.

B:
Reduce total revenue but not the quantity demanded.

C:
Reduce both total revenue and the quantity demanded.

D:
Increase total revenue and quantity demanded.


Question:
The repayment of a loan and the interest due with a series of equal payments over a specified period of time.


Question:
The short-run production decision concerns the:


Question:
Which of the following is characteristic of single competitive firms?

A:
They have no control over the market price of their output.

B:
They face a horizontal demand curve for their output.

C:
They can sell their entire output at the prevailing market price.


Question:
The change in total revenue that results from a one-unit increase in  the quantity of output sold is:


Question:
For competitive firms, the market price of the firm's output is equal to:


Question:
The law of diminishing returns explains:

A:
Why marginal costs eventually increase in the short run as more output is produced.

B:
Why the demand curve of the competitive firm is perfectly elastic.

C:
Why the average fixed cost curve declines as long as output increases.


Question:
Short-run profits are maximized at the rate of output where:


Question:
If, over a given range of output, marginal revenue exceeds marginal cost:


Question:
The firm wishing to maximize short-run profits will increase its rate of output as long as:

A:
Average revenue exceeds average variable cost.

B:
Marginal product exceeds average product.


Question:
Total profits are maximum at the rate of output at which:

D:
The difference between total revenue and total cost is greatest.


C:
Average total cost plus average revenue.


Question:
A competitive firm has found that marginal revenue and marginal cost are equal at a price $50 per unit of output.  At this rate of output--2,000 units per week--average total cost is $40 per unit. Total profits are:


Question:
Which type of accounting adjusts for such things as inventory changes and changes in prepaid expenses and unused supplies?


Question:
Which of the following is important to the investment decision but irrelevant to the production decision?


Question:
Which of the following are all market supply determinants?

A:
Technology, price of resources, and number of sellers.

B:
Prices of other goods, expectations, income, and tastes.

C:
Prices of other goods, expectation, technology, and number of buyers.

D:
Prices of resources, technology, expectations, and the price of the good itself.


A:
Encourage firms to build new factories and expand or modernize old ones, creating more jobs and output.

B:
Increase Treasury tax revenues from corporations.

C:
Decrease the amount that firms can deduct from taxable income.


Question:
The market demand curve for wheat is downward-sloping.  An individual wheat farmer sees the demand curve for his wheat as:

C:
Horizontal at the prevailing market price.

D:
Vertical at the prevailing market quantity.


Question:
Other things being equal, if a new agricultural technique allows all potato farmers in the country to increase their yields per acre, the price of potatoes is likely to:

C:
Remain unchanged while farm revenue rises.

D:
Remain unchanged while farm revenue declines.


Question:
The market supply of a competitive industry is:

B:
Identical to the marginal cost curve of the lowest-cost producer.

C:
An upward-sloping curve when firms have increasing marginal cost.

D:
A horizontal curve when firms have decreasing marginal costs.


Question:
At the profit-maximizing level of output, the marginal revenue of a competitive producer is:


Question:
U.S. wheat farmers confront all of the following prices for their wheat except for the:


Question:
Which of the following statements is true regarding the U.S. agricultural industry?

A:
It is one of our least efficient industries.

B:
It displays a remarkable stability of prices and output.

C:
Demand for agricultural goods is highly price elastic.

D:
It is prone to recurring "booms" and "busts."


Question:
U.S. agriculture is an example of which of the following market structures?


Question:
Neither lower prices nor higher incomes significantly increase the quantity of food demanded because:

A:
Food is an inferior good, not a normal good.

B:
The price and income elasticities of food demand are too high.

D:
The price and income elasticities of food demand are low.


Question:
A bumper crop of wheat can lead to sharply lower market prices and a decline in earned farm income because of:

A:
The high income elasticity of demand for wheat.

C:
The low price elasticity of demand for wheat.

D:
The horizontal demand curve which individual wheat farmers face.


Question:
U.S. farm policy has at various times implemented a variety of programs which:

A:
Seek to raise and stabilize the prices of farm products.

C:
Provide direct income support to farmers..


Question:
The relationship between farm and nonfarm prices which existed during the period 1910-14 has come to be known as the:


A:
Are cooperatives that limit production for geographically concentrated crops such as walnuts and avocados.

B:
Are cooperatives that negotiate terms of trade with buyers of farm products.

C:
May force all farmers in a specific geographic region to join if at least 2/3 of the farmers vote to authorize a bargaining association.

D:
Are cooperatives of growers that work to get  marketing orders approved.


Question:
You are a grain trader and you get an order from Mexico.  Although you currently have no grain, you agree to sell the wheat to Mexico for $4.00 per bushel in six months.  Which of the following is true?

A:
Since you are afraid prices will fall, you hedge long.

B:
Since you are afraid prices will rise, you hedge long.

C:
Since you are afraid prices will fall, you hedge short.

D:
Since you are afraid prices will rise, you hedge short.


A:
You are probably long in the cash market and worried prices will fall.

B:
You are probably short in the cash market and worried prices will fall

C:
You are probably long in the cash market and worried prices will rise

D:
You are probably short in the cash market and worried prices will rise


Question:
The amount of money you have not received at the end of the accounting period for work completed is an example of what type of item?


Question:
The amount of money you have not paid at the end of the accounting period for work completed is an example of what type of item?


B:
You must own the underlying futures contract.

C:
You are probably short in the cash market.


C:
Weak or strong depending on whether you are a hedger or speculator.


A:
You protect yourself against adverse price changes.

B:
You temporarily replace an upcoming cash transaction.

C:
You make an opposite transaction in the futures market as your current cash position.


Question:
A shift in the demand curve for wool can be caused by

C:
Labor saving technology in wool production


Question:
Income elasticity of demand for beef measures

A:
Effects on quantity demanded of beef, given a change in the price of beef

B:
Effects on quantity demanded of beef, given a change in the price of chicken and pork

C:
Effects on the price of beef, given changes in supplies of beef

D:
Effects on the quantity demanded of beef, given changes in income levels of consumers


A:
Limits the return on capital stock to 10%.

B:
Limits the amount of non-member business to no more than 75%.


Question:
The funds deposited with a broker to trade futures contracts is called:


Question:
A term debt and capital lease coverage ratio of 1.5:1 or 150% indicates:


Question:
Identify a strategy to improve the term debt and capital lease coverage ratio:


Question:
An advantage of a projected cash flow budget is that:


Question:
Which of the following items would not be a business expense for this accounting period?


Question:
Interest received from an investment is added to the principal and interest is paid again on the total sum.  It can be used to determine the future value of the amount of money that you now have.


Question:
You operate a farm in partnership with Aunt Matilda who contributes land worth $185,000 and part of the operating expenses at $15,000. If you contribute your machinery at $50,000 and labor worth $15,000 as well as $35,000 for operating expenses, what would your share or the $300,000 gross income be if you share income according to your contribution?


Question:
The process of estimating the profitability of an investment, or comparing the profitability of two or more alternative investments.  Also called capital budgeting.


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed with shifting from a variable rate loan to a fixed rate loan.


Question:
A farmer can earn $85 per acre from growing corn, $60 per acre from growing milo and $50 per acre by renting the land to his neighbor. The opportunity cost of raising milo is:


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by purchasing crop insurance.


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by purchasing health insurance.


Question:
Given the following production function data, what is average physical product for 3 units of input?  Input = 3, Total Physical Product (TPP) = 210; Input = 4, TPP = 240; Input = 5, TPP = 250; and Input = , TPP = 240.


Question:
In addition to records of revenues and expenses, a more complete record system for a ranch can be developed by maintaining records of which of the following?

B:
Records of production costs and weather conditions


A:
Difference between cash revenue and cash expenses.

B:
The excess of receipts over payments to all factors of production.

C:
Return to unpaid family and operator labor, equity capital and management.

D:
Return to unpaid family and operator labor, debt capital and management.


Question:
Given the following production function data, what is marginal physical product between 4 and 5 units of input?  Input = 3, Total Physical Product (TPP) = 210; Input = 4, TPP = 240; Input = 5, TPP = 250; and Input = , TPP = 240.


Question:
The best format for a budget in our complex economy is:


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by forward contracting corn sales.


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by increasing cash reserves.


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by installing an irrigation system.


Question:
Term debt coverage ratio indicates whether a farm business produces enough cash to cover the current portion of the term debt (farm and non-farm).  A projected ratio of less than one (1:1) indicates that a business may need to:

C:
Sell assets to make scheduled payments to the bank.


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by purchasing liability insurance.


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by reducing the amount of borrowed money used.


Question:
Which of the following would cause Return on Assets (ROA) to decrease?


Question:
Which of the following would cause the cost of debt (COD) to decrease?

D:
Increased depreciation due to capital purchases.


Question:
If ranch owners do not develop a will, the property they own at the time of death will be distributed using which procedure?

B:
The property will be divided equally among their children

C:
The heir operating the ranch at the time of death will inherit the entire ranch

D:
The laws of descent for the state of residence


Question:
When Santo Farms sells fall soybeans to the Bio-Diesel plant in May for fall delivery it is considered a:


Question:
The legal, economic and social act of determining the allocation of a person's property to appropriate heirs is defined as:


Question:
A positive capital-replacement and term-debt replacement margin indicates that the term debt coverage ratio is:

D:
Equals capital-replacement and term-debt replacement margin.


Question:
Which loan repayment schedule would cause you to pay the most interest?


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by developing a limited liability company (LLC) to serve as an operating entity.


Question:
The effect of underestimating the ending corn inventory for 19X1 by $4,000 (assuming all other records are correct) is:

A:
Cash expenses are understated by $4,000 in 19X1.

B:
Net farm income for 19X1 is understated by $4,000.

C:
Ending net worth is understated by $4,000 for 19X2.

D:
19X2's net farm income will be understated by $4,000 (assuming all ending inventory records are correct for the following year).


B:
Net farm income for 19X1 is understated by $2,000.

C:
Beginning net worth is overstated by $2,000 for 19X2.

D:
19X2's net farm income will be overstated by $2,000 (assuming all ending inventory records are correct for the following year).


B:
Net farm income for 19X2 is understated by $2,000.

C:
Ending net worth is understated by $2,000 for 19X1.

D:
19X2's net farm income will be overstated by $2,000 (assuming all ending inventory records are correct for the following).


Question:
Economic theory helps us in our decision making by:

A:
Duplicating the detail of the real world.

B:
Using mathematics so as to eliminate judgmental errors.

D:
Providing us with more factual information.


Question:
If something is extremely rare but not scarce, its price will be:

B:
Too high for all available units to be sold.

C:
So high that only the very rich will buy it.


Question:
Regardless of the type of economic system that is used, all nations of the world face a common economic problem.  That problem is:

C:
Too costly and wasteful consumer buying habits.


Question:
It would be unnecessary to study economics if we could:


Question:
When a good or service is scarce, it means that:

A:
We can't economize in our purchase of that good.

B:
We have to forget about economics and buy everything that is available.

C:
The economic system has failed to operate properly.


B:
Producers have made the wrong decisions.


Question:
Decision making over alternative choices:


C:
Sacrifices that we make in our daily lives.


Question:
Some family farms have been incorporated because:

A:
Corporate income taxes are lower than individual rates for taxable income over $25,000.

B:
A corporate form of organization can be used to transfer farms to others at a lower cost.

C:
Of the greater cost efficiencies that are available to corporate farms.

D:
Corporate farms provide a means to escape the effects of price variability.


Question:
When you shop for a loan, what should you shop for?


Question:
When opposing forces within the economic system just offset each other, so that there is no incentive to change, we say the system is:


Question:
Which of the following would reduce the demand for butter?


A:
Money is the only thing that matters to people.

C:
Quantities purchased depend upon sacrifices made to obtain those amounts.


C:
People will do anything to obtain the goods that they want.


Question:
The demand for Good A gives the relationship between price and quantity demanded, other things held constant.  These "other things" include all of the following except:


Question:
If the price of a good is reduced to $10 per unit from $11 per unit, and as a result of that price decrease sales increase to 1000 units from 950 units, it can be concluded that:

C:
Demand elasticity measures do not apply in a situation such as this.


Question:
Suppose that between Year 1 and Year 2 both the price and sales of beans (a normal good) decreased.  Which of the following changes is consistent with this?

A:
The price of a substitute good increased.

B:
The price of a substitute good decreased.


Question:
The word "capital" as used in economics refers to:

B:
Produced goods that are being used to produce other goods.

C:
Man-made assets of value that can produce other goods.


Question:
Which of the following activities can be called "production"?


Question:
The firm's demand curve for an input (soybean meal) will shift if:

C:
The production function is changed because fixed inputs have been changed.

D:
The Marginal Factor Cost of soybean meal changes.


Question:
The time period which is short enough that the firm is able to vary the quantities of some (but not all) of its resources is called:


Question:
The dividing line between Stage I and Stage II is determined on a production function graph at:


Question:
The competitive firm's demand curve for a variable resource is:


A:
The relationship between inputs and the output.

B:
The output to be obtained from different quantities of the variable input used.

C:
The units of variable input that would be required to produce a given level of output.


A:
Is the number of units of input X1 per unit of X2.

B:
Is the total cost of producing one more unit of output.

C:
Is the units of output produced by one more unit of input.

D:
Cannot be determined until dollar values are known.


Question:
When another unit of a variable input will add more to total value product than it costs to use, that unit of input:

B:
Is one whose Marginal Value Product is greater than its Marginal Factor Cost.

C:
Is one whose Marginal Value Product is zero or less.

D:
Has no functional relationship to output or profit.


Question:
Land that produces wheat usually can produce barley also.  A decrease in the price of wheat, all other things held constant, will tend to:

A:
Increase the relative profitability of producing barley.

D:
Increase the quantity of wheat supplied.


Question:
Along a production possibilities curve, an increase in the output of one good can be obtained:

A:
By increasing the output of the other good.

B:
By holding production of the other good constant.


A:
Causes labor to have to work harder to keep up with the competition.

B:
Reduces the earnings of all resources in the economy.

C:
Will occur more rapidly as the opportunity cost of labor increases.


Question:
For an owner-operated firm, total cost of production for any given output:

A:
Is equal to its explicit costs plus implicit costs.

B:
Is its implicit costs minus explicit costs.

C:
Is its explicit costs minus implicit costs.

D:
Is that firm's total cash outlay to produce that output.


Question:
If producers increase the quantity supplied in response to an increase in the price of their product, they will experience:

A:
A decline in total revenue if supply is inelastic.

B:
A decline in total revenue if supply is elastic.

C:
A decline in total revenue no matter whether supply is elastic or inelastic.


Question:
A firm may choose to produce at a loss in the short run, and wisely so, if it is at least:


Question:
A family farm that is operated solely with that family's labor:

A:
Will have lower labor costs that if they used hired labor instead.

B:
Will have no labor cost unless they pay themselves a salary.

C:
Cannot escape labor cost in operating their farm.


Question:
When we say that a price in the competitive market is "below equilibrium" we mean that:

A:
No producer can cover variable costs of production at that price.

B:
Consumers are unwilling to buy all the product supplied at that price.

C:
Quantity supplied is less than quantity demanded at that price.


Question:
Marginal costs are the costs relevant to a decision because they:

A:
Are the only costs that will be affected by the decision.

C:
Are typically greater than average costs.

D:
Can be greater or less than opportunity costs.


Question:
A firm that is a profit maximizer will increase its output so long as:

C:
Marginal revenue is positive, but decreasing.


Question:
The cost of producing an additional unit of output is:


Question:
For a market economy in which the individual producer is unable to influence price, the price that exists:

A:
Is determined by the largest firm in that industry.

B:
Cannot be determined by economic theory.

C:
Is determined by the interaction of the forces of supply and demand.

D:
Is determined by what each firm decides to charge for its output.


Question:
The competitive firm's short-run supply curve is also its:

A:
Marginal Physical Product curve above maximum Average Physical Product.

B:
Average Variable Cost curve through its entire range.

C:
Marginal Value Product curve above maximum Marginal Value Product.

D:
Marginal Cost curve above minimum Average Variable Cost.


Question:
An increase in the supply of an item, demand remaining unchanged:

B:
Will have no effect on consumer budget allocations.

C:
Is impossible because if supply changes demand must also change.


Question:
The fact that the actual price paid for Fords is very close to the actual price of comparable models of Chevrolets is evidence that

A:
The firms producing these cars are colluding to set price.

B:
The firms producing these cars have no control over price at all.

C:
Consumers regard these cars as close substitutes for one another.


Question:
Which of the following curves is perfectly elastic?

A:
The marginal cost curve of a producer who is a price taker.

B:
The demand curve facing an imperfectly competitive firm.

C:
The demand curve of an individual consumer.


Question:
Which of the following would occur if a price-taking farmer were to raise the price of the product above the equilibrium price?

A:
All other farmers would change their price too.

B:
This farm would not be maximizing its profits.

C:
This farm would get a larger share of the market, and be more profitable.

D:
Other farmers would be driven out of the industry.


Question:
A price taking firm maximizes its profits by producing that quantity of output that corresponds to the point where:


Question:
Suppose a firm can sell as much or as little of its product as it wishes at a price of $100 per unit.  This firm:


Question:
Marginal revenue is greater than price for the price taker, because:

A:
Of the power that firm exerts in the market.

B:
Its decisions to produce more or less cause this to be so.

C:
Of the amount the marginal unit adds to total revenue.


Question:
If a firm must sell its output at the going market price, and that firm wants to earn as much profit as that price makes possible, it should:

A:
Produce and sell that quantity of output at which Marginal Cost equals price.

B:
Produce the greatest output that the firm is capable of producing.

C:
Produce and sell that quantity of output that minimizes Average Variable Cost.

D:
Never let Marginal Cost = Marginal Revenue, since profits would then be negative.


Question:
Which of the following statements describes the role of prices in an economy characterized by markets in which at their own initiative people buy and sell goods and services?

A:
Price functions as a rationing device on the demand side.

B:
Price functions as a rationing device on the supply side.


Question:
When the market price of a good is lower than the marginal cost of producing it, and Marginal Cost also is increasing:

A:
Too few resources are being allocated to the production of that good.

B:
The cost of producing additional units of that good is less than what buyers are willing to pay for those additional units.

C:
Too many resources are being allocated to producing that good from the standpoint of society.

D:
Too few resources are being allocated to the production of that good from the standpoint of the producing firms.


Question:
A firm exhibits some or all of the characteristics of a monopoly if:

B:
It sells a completely differentiated product.

C:
Potentially competing producers are kept out of that market.


Question:
On a per-unit basis economic profit can be stated as the difference between:


Question:
Public regulation of markets is intended to protect consumers by:

A:
Breaking up monopoly, no matter where it exists.

B:
Increasing the degree of competition in those markets.

C:
Permitting consumers to monopolize producers' markets.


Question:
When governments restrict entry of new businesses into industry, the effect in that industry is to:

A:
Increase competition and reduce economic profit.

B:
Reduce competition and increase economic profit.

C:
Reduce both competition and economic profit.

D:
Increase both competition and economic profit.


Question:
Price exceeds marginal revenue for the pure monopolist because:

A:
That firm's demand curve is perfectly elastic.

B:
That firm produces a smaller output than a price taker would.

C:
That firm's demand curve lies below its Marginal Revenue curve.

D:
That firm's demand curve slopes downward to the right.


Question:
Sources of credit for farmers and ranchers are:


Question:
Bob Farmer was not able to purchase all the corn he needed for feed this past fall.  To protest the fall low, he should _______ in case corn should increase in price.


Question:
Dale Dairyman thinks that the price of milk for next fall looks good.  To hedge his price, he should:


Question:
The present owner of the Farm Credit System is:

C:
Commercial banks, in proportion to their contribution of funds.


Question:
When Carl Cornproducer uses the futures to protect his corn cost and wants to cover 50,000 bushels, he would need to buy how many futures contracts (when using the Chicago Board of Trade).


Question:
The type of loan that cannot be made by the Farm Service Agency is a:


Question:
The Commodity Credit Corporation makes this type of loan to producers:


Question:
Which income tax schedule or form should be used to report a sale of cull beef cows?


Question:
Supporting farm prices above their equilibrium price results in:

A:
A surplus, so some type of storage program is necessary.

B:
A shortage, so some type of discrimination is needed to allocate the supply.

C:
An equilibrium, and there are no other effects.

D:
Lower prices than would exist in the free market.


Question:
Most of the farms and ranches in the United States are:


Question:
Agriculture could return to a free market if:

A:
The government eliminated the farmer-owned reserve.

B:
The government eliminated production controls, price supports, storage programs and consumer food subsidy programs.


A:
Decreases production and price to the consumer.

B:
Increases production and decreases price to the consumer.


Question:
A market that has a uniform commodity such as corn or wheat with many buyers and sellers is:


Question:
The demand for many agricultural products is inelastic.  This means:

A:
An increase in production increases price and income.

B:
A decrease in production decreases price and income.

C:
A decrease in production decreases price and total farm revenue.


Question:
In a competitive market, variations in the price between different grades of corn should:

A:
Have little economic significance for corn producers.

B:
Reflect differences in supply and demand for various qualities of corn.


Question:
If the government imposes a price ceiling on beef that is lower than the price that would prevail in a free market, the result would be:

C:
An increase in the price of corn, sorgham, and barley feeds.

D:
A situation called "excess demand" in the beef market.


Question:
An example of vertical integration would be:

A:
A merger between Continental Grain Co. and Bunge Grain Corp.

B:
Purchases of U.S. grain by Russia and China.

C:
Albertson's slaughtering and processing their own meat.


Question:
Given the supply curve for chicken, a drop in the price of pork chops will:

A:
Tend to shift the demand curve for chicken to the right.

B:
Tend to shift the demand curve for pork chops to the right.


Question:
Which of the following events might shift the demand curve for beef?


Question:
Marketing is productive because it adds:

A:
Time, form, and place utilities to commodities.


Question:
Producers are sometimes interested in forming bargaining associations so that they might:

A:
Have some control over price and/or other terms of trade.

C:
Increase the volume of their products marketed.

D:
Get the government to help market their products.


Question:
The statistic "farmer's share of the consumer dollar" indicates:

C:
The costs of marketing and the farmer's share.


A:
Reduce the price risks of carrying the commodity.

D:
Deliver their commodity to the futures market.


Question:
To be "short" in the futures market means that:

A:
A trader has purchased contracts not covered by sales.

B:
A trader has sold contracts not covered by purchases.


Question:
Which of the following factors would not shift the supply curve of a commodity?

A:
Changes in the profitability of substitute commodities.

B:
A change in the technology of producing that commodity.

C:
Changes in the prices of joint products.


Question:
From the perspective of economics, interest paid is:

A:
No cost at all because there is no sacrifice involved.

B:
The opportunity cost of acquiring funds.

C:
A real cost only when it involves a written contract.


Question:
We know that land in the United States has become more scarce over time because:

A:
There are more tractors used now than ever before.

B:
Less land is now being offered for sale.

C:
The price of land has risen relative to other resource prices.

D:
The economic supply of land has declined over the years.


Question:
Discounting is a process that uses a rate of interest to:

A:
Compare the relative values of labor and nonlabor income.

B:
Reduce the price of goods that people pay for in installments.

C:
Determine the present value of amounts to be received in the future.


Question:
Western European farmland typically produces greater quantities of output per acre than does U.S. farmland.  This tells us that:

A:
Their land is a more efficient producer of food than U.S. land.

B:
Their land is more costly relative to other inputs they use in production.

C:
Land and other inputs cannot be substituted for one another.

D:
U.S. land is of poorer quality as compared to theirs.


Question:
When the relevant (opportunity) interest rate for discounting is 20 percent, a capital asset that produces a net return of $6,000 per year in perpetuity (i.e., forever) will have a capitalized or present value of:


Question:
Certain capital assets (land, buildings, machines) are inanimate objects.  Thus:

A:
Opportunity cost is not an important concept for such items.

B:
We need not be concerned with the rate of return to such capital.

C:
Non-monetary factors are of no importance in their overall return.


Question:
U.S. agriculture is so much more productive than it formerly was because:

A:
Human labor now works harder than previously.

B:
We have been able to make hired labor work harder and longer days.

C:
We combine greater amounts of capital with land now than we did before.


Question:
From society's point of view, the production decisions of private firms that cause air or water pollution produce:


Question:
On a world-wide basis, total food production:

A:
Is not adequate to feed the total population.

B:
Is adequate to feed the total population.

C:
Has been decreasing at an increasing rate.

D:
Has remained constant in absolute quantity.


Question:
The world food problem is primarily one of:


Question:
Which function of management is concerned with monitoring the results of a decision and taking corrective action?


Question:
Which of the following shows the proper sequence of management functions as they would be applied to a specific problem?


Question:
"Doubling the number of acres farmed in 10 years" is an example of a:


Question:
Which of the following is an example of an organizational decision?


Question:
Which of the following is an example of an operational decision?

A:
Determining the feed ration for feeder pigs.

C:
Buying a new set of machinery with greater capacity.


Question:
"What managers do" is best described by which of the following?


Question:
The last step in the decision-making process is:


Question:
A fiscal accounting period is one which:

C:
Ends on any date other than December 31.

D:
Can only be used by government agencies.


Question:
The depreciation method with the greatest annual depreciation in the first year is:

D:
Any of the above as they all have the same amount of depreciation for the first year.


Question:
Which of the following cannot be valued using the cost less accumulated depreciation method?


Question:
Selling grain from storage would be which type(s) of farm business activity?


Question:
When using cash accounting which of the following accounts would never be used?


Question:
A prepaid expense is one where payment is made:

B:
In an accounting period prior to the one in which the purchased item will be used to produce income.


Question:
The proper term for the value found by subtracting accumulated depreciation from the asset's original cost is:


Question:
Which of the following would NOT be recorded when using a single entry, cash accounting system?

A:
Charging $2,000 worth of chemicals at the farm supply store.

C:
Recognizing that $3,476.34 of interest has accrued since the last interest payment.


Question:
The total depreciation over an asset's useful life is equal to:


Question:
One advantage of a double-entry accrual accounting system over a single-entry cash system is:

B:
A current balance sheet is always available.

C:
Noncash transactions do not need to be entered.


Question:
Which of the following is an example of a noncurrent liability?


Question:
Which of the following is an example of a current asset?


Question:
Another term which has the same meaning as owner's equity is:


Question:
Of the following, which is the most liquid asset?


Question:
If a business has working capital greater than $0, its current ratio will be:

D:
There is no relationship between the amount of working capital and the current ratio.


Question:
If the debt/asset ratio is increasing, then the debt/equity ratio will be:


Question:
Which of the following best describes a balance sheet?

A:
It shows changes in assets and liabilities over the last accounting period.

B:
It shows changes in assets and liabilities over a period of time.

C:
It shows assets and liabilities at a point in time.

D:
It shows profit for the last accounting period.


Question:
The best description of a business which has increased its debt/asset ratio is one which has:

D:
Increased its debt relative to total assets.


Question:
Which of the following assets would have the same value under either a cost or market basis valuation?


Question:
The degree to which a farm's assets adequately cover or exceed its liabilities is referred to as:


Question:
Net farm income less family living expenses and income taxes equals:


Question:
Which of the following would NOT be included as an expense on an accrual income statement?


Question:
How does the sale of an old tractor affect an income statement?

A:
Increases revenue by the amount received for the tractor.

B:
Increases (decreases) revenue by the amount of gain (loss).

C:
Increases revenue by the amount of depreciation taken over its life.


Question:
If return on assets is greater than return on equity, the interest rate on borrowed money is:


Question:
The purpose of a farm income statement is:

A:
To compute assets and liabilities over an accounting period.

B:
To compute owner's equity at a point in time.

C:
To show revenue, expenses, and net farm income for an accounting period.


Question:
An increase in prepaid expenses shows up on an income statement as:


A:
Greater than the opportunity cost of management.


Question:
Which of the following is NOT included in the revenue section of an income statement?

B:
An increase in the market value of land.


Question:
A gain on the sale of a depreciable asset implies:

C:
Too little depreciation was taken over its life.

D:
Too much depreciation was taken over its life.


Question:
Any difference between net farm income and net farm income from operations is due to:

A:
Gain or loss on the sale of machinery or land.


Question:
If marginal physical product is decreasing with additional input, marginal value product will be:


Question:
Which items would reduce income taxes for this year?

A:
Defer all possible income into the next tax year


Question:
The relationship between input and output in a production function is shown in:

C:
Terms of total input cost and total value product.


Question:
The equation for computing marginal cost is:

C:
Change in total cost divided by change in input.

D:
Change in total cost divided by change in output.


Question:
If a farmer is producing at some point where Marginal Revenue is greater than Marginal Cost and input is not limited:

B:
More input should be used to maximize profit.

C:
More output should be produced to maximize profit.


Question:
If Marginal Physical Product is less than Average Physical Product, then Average Physical Product:


Question:
If the price of the input decreases, a profit maximizing farmer should:


Question:
The Equal Marginal Principal should be used whenever:

C:
There is a limited input and several alternative uses for it.

D:
A farmer wishes to maximize production from several different enterprises.


Question:
A diminishing marginal physical product occurs because of:

D:
Limits on physical or biological response to increased input levels.


Question:
Profit is maximized somewhere in the range where marginal physical product is:


Question:
Supplementary enterprises are those where:

A:
The output of one can be increased only by reducing output of the other.

B:
The output of both enterprises can be increased at the same time.

C:
The output of one can be increased with no change in the output of the other.


Question:
Real estate held at the death of the owner gets a new basis of:


Question:
The feed combinations in a least-cost feed ration depends on all the following EXCEPT:

B:
Substitution rates between the feeds available.

D:
The nutritional requirements of the livestock.


A:
Total fixed costs are zero when there is no production.

B:
Total variable costs are zero when there is no production.

C:
Total cost will remain constant as output is increased.

D:
Total cost will decrease as output is increased.


Question:
The opportunity cost of one more unit of a variable input is:

A:
Its market value at the time of its use.

C:
The return from using that input in its next best alternative use.


A:
Will eventually increase as output is increased.

B:
Will eventually decrease as output is increased.

D:
Has the same shape as the marginal revenue curve.


Question:
Which of the following costs are for one unit of output?


Question:
Which of the following could be used to compute Average Total Cost?

A:
(Total Variable Cost - Total Fixed Cost) / Output.

B:
(Average Fixed Cost + Average Variable Cost) / Output.

D:
(Total Fixed Cost + Total Variable Cost) / Output.


Question:
In the short run, production should be stopped whenever:

A:
Total revenue is less than total variable cost.

C:
Total revenue is less than total fixed cost.

D:
Total revenue is greater than total fixed cost.


Question:
There are increasing returns to size whenever a larger business:

A:
Has a larger average cost per unit of output.

B:
Has a smaller average cost per unit of output.

C:
Has the same average cost per unit of output.

D:
Increasing returns to size cannot be described in terms of average costs.


Question:
At the output level where Marginal Cost is equal to Average Total Cost,

A:
Marginal Revue is equal to Marginal Cost.

B:
Marginal Cost is also equal to Average Variable Cost.

C:
They are both less than Average Fixed Cost.

D:
Average Total Cost is at its minimum value.


Question:
As output increases with no change in total cost, breakeven price will:

D:
Initially decrease and then begin to increase.


Question:
The values in a crop enterprise budget are normally for:


Question:
Which of the following are or could be totally noncash expenses on an enterprise budget:


Question:
Which of the following terms, if used on an enterprise budget, would be considered the same as variable cost?


Question:
Which of the following would be a fixed cost on a typical crop enterprise budget?


Question:
Which of the following may be included on a partial budget?


Question:
The values shown on a partial budget are:

A:
Total revenue and total expenses for the farm.

D:
Only those revenues and expenses which will change.


Question:
Which of the following are the profit increasing changes on a partial budget?

A:
Additional costs and additional revenue.


Question:
Which of the following are the profit decreasing changes on a partial budget?


Question:
If a partial budget shows some fixed or ownership costs under Reduced Costs, it means:

A:
The proposed alternative requires purchasing a new capital asset.

B:
A new capital asset must be purchased next year with either alternative.

C:
The proposed alternative would allow sale of a capital asset that will no longer be needed.

D:
There is an error on the budget as fixed costs are never included under Reduced Costs.


Question:
A partial budget is designed to analyze the effect of a proposed change on:


Question:
A partial budget would be the most useful type of budget for estimating:

A:
The amount of borrowing needed for the next year.

B:
The breakeven price needed to cover all costs of cotton production.

C:
Labor needed on the farm during the next year.

D:
The change in profit from installing an irrigation system on one field.


Question:
If an acre of alfalfa requires $75 of operating capital and 5 hours of labor, and a farm has 70 acres of land and $4,500 of operating capital available, the maximum acres of alfalfa that can be grown is:


Question:
When comparing several long range farm budgets with different quantities of major fixed resources such as owned land or permanent labor, the prices used to estimate gross income should be:

A:
Current prices on the date the budget is made.

B:
Prices expected when this year's products are sold.

D:
Expected average prices over the next several years.


A:
Costs, returns, and resource needs for a specific set of enterprises.

B:
Costs and returns that would be affected by a specific management change.

C:
Projected costs and returns for one unit of a specific enterprise.

D:
The actual costs and returns that were realized during one year for all the enterprises on a farm.


Question:
Which of the following would NOT appear on a cash flow budget?


Question:
Which of the following would appear on an income statement but not on a cash flow budget?


Question:
When preparing a cash flow budget it is important to:

A:
Take into account the timing of cash inflows and outflows.


A:
Estimate when and how much money will need to be borrowed during the year.

B:
Estimate when and how much debt can be repaid during the year.

C:
Estimate when excess cash may be available so plans can be to invest it.


Question:
A projected negative annual cash flow before any new borrowing is considered indicates:

C:
Total debt will be higher at the end of the year than at the beginning.

D:
There should have been more debt at the beginning of the year.


Question:
A cash flow budget can be used to monitor the farm business by:

A:
Comparing actual cash inflows and outflows to the budgeted monthly cash flows.

B:
Comparing actual cash inflows and outflows to last year's cash flows.

C:
Comparing the projected ending cash balances to the actual balances for each month.

D:
Comparing actual selling prices to those assumed in the cash flow budgets.


Question:
A cash flow analysis of an investment in a new capital asset should include projections for:


Question:
The last step in constructing a cash flow budget should be:

A:
Estimating the amount of crop and livestock production for the year.

B:
Estimating how much new current debt will be needed and can be repaid each month.

D:
Estimating when payments on existing debt are due.


A:
Some partners do not participate in management, and have limited liability.

B:
The maximum number of acres farmed is fixed by law.

C:
The number of partners must not exceed 35.

D:
Only one type of enterprise is carried out.


Question:
Most farmers are more likely to accept a risk if:

C:
They have high fixed cash flow obligations.

D:
They are primarily concerned with maintaining their net worth.


Question:
Which type of farm lease agreement results in the MOST price and yield risk for the tenant?


Question:
Which of the following strategies does NOT reduce production risk?

A:
Selling grain before harvest by a forward contract.

D:
Keeping enough extra hay stored to feed the cows through the winter.


Question:
What type of insurance protects farm operators from the loss of a building from fire or wind?


Question:
The success of hedging as a measure to reduce price risk depends on the fact that cash and futures contract prices for the same commodity.

A:
Move up or down independently of each other.

B:
Tend to be about the same on a given day.

C:
Tend to move up or down at the same time.


Question:
The goal of income tax management should be:

A:
To pay as little income tax as possible.


Question:
The process of finding the future value of a sum is called:


Question:
The processing of finding the present value of a sum is called:


Question:
A series of periodic payments is called a(n):


Question:
Using a higher discount rate will cause the present value of a future amount to:

D:
Increase for short time periods but decrease for time periods of over 10 years.


Question:
A net present value of zero means the investment has an internal rate of return:


Question:
The internal rate of return is the interest rate which would:

A:
Make net present value just equal to zero.

B:
Make net present value greater than zero.

C:
Make sure the investment would be financially feasible.

D:
Generate a positive net cash flow from the investment.


Question:
The future value of $10,000 placed in a savings account will depend on:

C:
Both the interest rate and the time in the account.


Question:
A financial feasibility analysis looks at the:

A:
The net present value of the investment.

B:
The internal rate of return for the investment.

D:
Net cash flows resulting from the investment and its financing.


Question:
The current ratio is a measure of a farm firm's:

B:
Ability to pay short-term credit obligations.

D:
Level of total debt to total assets at the present time.


Question:
Two similar farms could have the same return to management but different net farm income due to:

A:
Differences in prices received for products sold.

B:
Differences in prices paid for inputs purchased.

C:
Differences in amount of unpaid labor and equity capital used.


A:
The volume of resources utilized in the farm business.

B:
The ratio of total liabilities to total assets in the business.

C:
The net farm income generated by the farm business.

D:
The volume of production generated per unit of resource utilized in the farm business.


Question:
A trend analysis for a farm business could be performed using what kind of data for comparison?

A:
Historical data from the same farm for the past five years.

B:
Data from comparable farms in the same region for the same year.

C:
Expected results from a whole farm budget completed at the beginning of the year.

D:
Historical data from similar farms in the same region for the past five years.


Question:
For a farm in which alfalfa hay is raised and fed to dairy cattle, to analyze alfalfa as a separate enterprise, the value of the hay fed should be recorded as:

A:
An expense to alfalfa and an income to dairy.

B:
An expense to dairy and an income to alfalfa.

C:
An asset to alfalfa and a liability to dairy.

D:
An asset to dairy and a liability to alfalfa.


Question:
The degree to which a farm's assets adequately secure its debts is referred to as:


Question:
An advantage of using the value of working capital instead of a cash flow budget to analyze a farm's liquidity.

B:
It takes into account the timing of the cash flows.

C:
It takes into account revenue to be received from the sale of products not yet in existence.

D:
It takes into account future operating expenses as well as debt repayment.


Question:
The most accurate method of allocating machinery fixed costs among crop enterprises is in proportion to:

A:
The number of acres planted to each crop.

B:
The gross income generated by each crop.

D:
The actual hours which the machinery is used on each crop.


Question:
The money received from the sale of raised cull beef cows is what type of income?


Question:
Which of the following sources of agricultural credit is NOT a government agency?


Question:
An example of debt restructuring that would improve a farmer's cash flow in the short run is:

A:
Lengthening the repayment period of a large loan from 3 years to 10 years.

B:
Increasing the interest rate on a line of operating credit.

C:
Consolidating several small loans into one larger one.

D:
Shortening the repayment period of a loan from 10 years to 3 years.


Question:
Outside equity to increase the total resources of a farming operation can be obtained by:

C:
Securing funds from non-operator investors or limited partners.


Question:
The degree to which a farm's liabilities are backed up by assets is known as:


Question:
An amortized loan repayment plan with a balloon payment:

A:
Has all the principal due in one payment.

B:
Has each total payment larger than the previous one.

C:
Adjusts the interest rate after each payment.

D:
Has more principal due in the final payment than in others.


Question:
The Farm Credit System obtains loan funds from:

A:
Selling bonds on the national money markets.


Question:
A farming operation that is earning an average return on assets of 4 percent could service a maximum debt-to-asset ratio of _________ if its average interest rate on borrowed money is 10 percent.


Question:
When a borrower wants to establish credit with a new lender, the possibility of success will be improved if:

A:
Existing loans and accounts payable are not revealed.

B:
Several years of accurate financial statements are provided, which show financial progress over time.

C:
The borrower will guarantee the loan alone rather than with a co-signer.

D:
The loan request is for a land purchase rather than for self-liquidating assets such as feeder livestock.


Question:
Crop share leases are based on the principle that gross income should be shared in the same proportion as:


Question:
Farm income and expenses are reported on which income tax schedule?


Question:
Under a flexible cash lease in which the rent paid is set equal to 30 percent of the actual gross income from the crop, the owner and tenant share what type of risk?


Question:
One advantage that owning farmland has over leasing is:

A:
Labor and machinery are used more efficiently.

B:
Net worth could increase if land values go up.

C:
The number of acres farmed is more flexible.

D:
Less capital is tied up in long-term investments.


Question:
The purpose of an environmental audit is to determine:

A:
The value of a piece of farmland based on the prices for which other farms have sold for recently.

B:
If lime or other fertilizer needs to be applied.

C:
If there are environmental hazards on a farm that need to be cleaned up or corrected.

D:
If the property taxes on a farm have been paid.


Question:
Landowners who wish to make all the decisions about production and marketing, but not contribute their own labor, would probably prefer a:


Question:
Which type of lease agreement results in the least price and yield risk for the landowner?


Question:
One advantage of custom hiring machinery operations over owning your own machine is:

C:
Depreciation deductions help reduce taxes.

D:
You have more control over the quality of work performed.


Question:
Farm machinery financial leases allow the farmer to:

A:
Deduct depreciation expense for the machine for income tax purposes.

B:
Purchase the machine at the end of the lease for below market price.

C:
Reduce repair and maintenance costs, compared to owning the same machine.

D:
Have less capital tied up in intermediate assets.


Question:
A grain drill has ownership costs of $3,600 and operating costs of $3.50 per acre.  The same operation can be custom hired for $8.00 per acre.  If the annual use is __________, it would be cheaper to own the machine.


Question:
The main advantage of purchasing used machinery instead of new machinery is:


Question:
One force that has helped cause U.S. farms to become larger and fewer is:

B:
Lower production costs per unit by spreading fixed investment in technology over more units.

C:
More labor used in agricultural production.


Question:
Standardization of farm financial ratios and accounting practices will help farm managers:

A:
Compete with nonfarm businesses for capital.

B:
Summarize their account books in less time.

D:
Manage hired employees more effectively.


Question:
Agricultural processors will probably want more uniform products in the future in order to:

D:
Make more efficient use of processing and packaging equipment.


Question:
Major sources of farm credit include each of the following except:


Question:
If you have two products that are substitutes for each other, when the price of one product increases, the quantity demanded of the other product:


Question:
If a product was said to be inferior and people's incomes went down, the demand for the product would:


A:
An agreement to contract goods at a later date.

B:
A legal promise to accept or deliver a specific commodity at a later date.

C:
Limited only for sales to big companies.


Question:
If product Z is a complement to product X and the price of product X decreases, then the quantity consumed of product Z will:


Question:
If someone's tastes and preferences are changed such that for any given price they will consume more, then:

C:
The demand curve hasn't changed, only the price has changed.


Question:
Pork is said to be inferior in the southeastern U.S. but a normal good in the midwest.  This is in reference to:


Question:
Fun, Inc. is a cooperative.  Its profits will be distributed to:

A:
Stock owners but at a rate not to exceed 8%.

B:
Stock owners at a rate proportional to number owned.


A:
Provide a service other businesses would not.

C:
Provide better services than other businesses.


Question:
The main objective of income tax management is:


Question:
An investment of $1,000 with annual benefits of $200 per year has a payback of:


Question:
The value of $1 left in a savings account for 2 years paying 12 percent interest would be $1.25 and illustrates the effect of:


Question:
The present value of $1 to be received is two years when the interest rate is 12 percent per year is:


Question:
The product marketing sector brings the consumer a product in:


Question:
The study of management utilizes a variety of skills such as those found in:


A:
Technically knowledgeable about product or service.


Question:
A clear definition of the problem is important because:

A:
It is the first step in decision making.

B:
The symptoms can help solve the problem.

C:
It helps to see what adjustments should be made.

D:
What is perceived to be the problem can determine what action should be taken.


Question:
Analysis of alternatives in decision making should use:


Question:
Next to problem identification the most important step in decision making is:

A:
Determination of alternative courses of action.


C:
Place the firm in the best position for the future.


Question:
Consumers consume a variety of goods because of the economic principles of:


Question:
Price is a good allocator of scarce resources in a free market because:

B:
Price should reflect relative scarcity of an item.


Question:
A shift in demand cannot be caused by a change in:


A:
The responsiveness of price to changes in quantity demanded.

B:
The responsiveness of quantity to changes in price.

C:
The responsiveness of income to changes in price.

D:
The responsiveness of population to change in price.


D:
Bridging the gap between consumption and production.


Question:
Which of these in NOT indicative of a speculator when he owns no other futures position?

C:
Does not own the underlying cash commodity

D:
Wants the market to go higher even though he owns a put option


Question:
The budgeting process is valuable because:

A:
It forces everyone to examine his relative position in the firm.

B:
It forces each manager to think clearly about his costs and revenues.

C:
Leads to lots of meetings with free lunches.


Question:
The types of budgets used by agribusiness include:


A:
Shows where accountants do most of their forecasting work.

B:
Indicates where timing of cash receipts are first monitored.

C:
Shows how capital will be raised by the firm.

D:
Shows how capital will be spent and allocated within the business.


A:
The easiest business structure to begin and end.

B:
Requires no government approval to operate.


Question:
The individual proprietor can do all the following except:

B:
Reap all the benefits and penalties of his efforts.

D:
Live in New Jersey but have a business in Nevada.


Question:
The major difference between a subchapter "C" or "S" corporation is:

A:
The types of property that can be acquired.

B:
The amount of business that can be done.


Question:
The major advantages of a corporation are:


Question:
Cooperatives play a major role in agriculture because:

A:
They are a major part of the history of agriculture.

B:
They provide countervailing market power against the evil enemies of agriculture.

C:
They enable farmers to lower their costs and raise the prices they receive.

D:
They improve the social fabric of rural life.


C:
All income above expenses returned to members.


Question:
For a ranch to lock in the price for a feed, it would:


Question:
Monthly car payments where the same amount is paid each month for so many years can be calculated using:


Question:
Frank Feeder contracted all the soybean meal he will need for the next year.  To regain any major drop in price if it should occur, he should:


Question:
To be a successful producer one must be all of the following except:


Question:
Examples of the production process include all of the following except:

A:
Processing milk into butter and ice cream.

B:
Processing soybeans into soybean oil and meal.


Question:
Agribusiness managers face several production decisions except:


Question:
Consumer demand for your production is determined by all of the following except:


Question:
In production economics, which of the following terms is not normally considered part of the system:


A:
The change in average product given a one unit change in one unit.

B:
The change in mean product given a one unit change in one input.

C:
The change in one variable input given a one unit change in total product.

D:
The change in total product given a one unit change in one input, all other things held constant.


Question:
Which of these is NOT an advantage of buying options?


Question:
The types of costs encountered by managers include all the following except:


Question:
Costs that change with the level of activity or business volume are called:


Question:
Examples of fixed costs would include all the following except:


Question:
Financial records are essential because they help a manager determine:

B:
His progress toward goals set in planning.


Question:
Financial records should be kept on all the following except:


Question:
Examples of current assets would include all of the following except:


Question:
Which of the following changes in financial statements generally are not cause for alarm:


B:
Buying materials for inventory for cash.

C:
Buying materials for inventory and buying on short term credit.


Question:
Uses of net working capital include all of the following except:


Question:
Liquidity ratios measure a firm's ability to:

C:
Make a profit from each dollar of sales.


Question:
Financial ratios are valuable to managers because they:

A:
Keep a close eye on future control decisions.

C:
Help analyze past performance and indicate areas where corrective action should be taken.

D:
Help identify what types of corrective actions are needed to improve performance.


Question:
Capital budgeting decisions differ from other types of decisions for all the following reasons except:


Question:
For a manager to be successful at capital budgeting she needs to be able to do all the following except:

A:
Determine the amount of capital required for investment.

C:
Forecast the additional earnings and benefits likely to occur.

D:
Locate an objective method to evaluate and select the best alternatives.


Question:
On April 1, Karen borrowed $8,000 to plant corn.  On November 1, she repaid the $8,000 along with $495 interest.  What annual interest rate did she pay?


Question:
A feedlot operator purchased 100 feeder steers with an average weight of 700 pounds and sold them at an average weight of 1050 pounds.  Total feed cost for the pen was $18,000.  Feed cost per pound of gain was equal to:


Question:
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 proportion.

D:
One factor is decreased and all others are fixed.


A:
The basic tool used in analyzing a change in farm operations and the potential change in net income.

B:
A statement of expected costs and returns associated with a specific production activity.


Question:
An advantage of making an estate the beneficiary of a life insurance policy is to:

D:
Provide liquid funds to satisfy tax liabilities.


Question:
The money you must deposit with a broker to insure performance in order to trade in the futures market is called a:


Question:
Tom Farmer earned $20,000 from farming last year.  His total assets are valued at $380,000.  He has outstanding mortgages and loans of $125,000.  What rate of return did he earn on his equity?


Question:
A grain farmer who normally stores his wheat at a local elevator has decided to use the options market.  To do so he will sell his wheat at harvest and:


Question:
The property of a farmer who dies without a will goes to:

C:
His heirs (based on each state's estate laws).


Question:
During the last 12 months, Mr. Jackson had cash receipts of $25,000 from the sale of crops.  He had cash outlays of $14,000.  Which of the following statements is correct?

A:
Mr. Jackson had a net farm income of $11,000.

B:
Mr. Jackson's net worth increased by $11,000.

C:
Mr. Jackson had a positive cash flow of $11,000.

D:
Mr. Jackson had a depreciation charge of $11,000.


Question:
Net farm income represents a return to what factors of production?

A:
Management, capital, paid labor, and unpaid labor.

B:
Management, capital and unpaid operator and family labor.


Question:
A farmer has an investment of $200,000 in his farm business.  He wants a return of $25,000 for himself and his family labor.  What will the net farm income have to be if interest on capital is 7%?


Question:
Agricultural options are heavily regulated to:

C:
Ensure the investor knows the risk of trading options


Question:
According to the "Farmers Tax Guide" the "basis" value of a new depreciable asset where a like trade is involved is:

A:
Its market price plus the undepreciated balance of the item traded.

C:
The undepreciated balance of the item traded plus the cash paid.


Question:
When preparing an annual budget for a corn production enterprise, land ownership costs are considered to be:


Question:
Which type of business would distribute patronage refunds?


Question:
Donna Farmer borrowed $100,000 from the First County Bank for five years on October 19, 20X1.  The terms of the loan require equal principal payments plus interest each October 19th.  If the interest rate is 10%, what would be the principal plus interest payment for October 19, 20X2?


Question:
Production of basic agricultural commodities and the incorporation of value-added services at various stages of marketing repond to:


Question:
A highly leveraged farm or ranch business:


Question:
A livestock producer, wishing to use futures markets to hedge the price of 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 the contracts when selling cattle.

D:
Buy futures contracts expecting to buy more contracts when selling cattle.


Question:
When the size of the soybean harvest exceeds locally available farm and elevator storage, what usually happens to the basis?


Question:
Renting land on shares of production rather than for cash results in:

A:
Less risk for both the landlord and the tenant.

B:
More risk for both the landlord and the tenant.

C:
Less risk for the landlord, more risk for the tenant.

D:
More risk for the landlord, less risk for the tenant.


Question:
A farmer has $150,000 of principal remaining on a mortgage at the end of the fiscal year. The annual principal payment is $15,000. Accrued interest at the end of the year amounts to $8,500. The year-end balance sheet shows:

C:
Non-current liabilities of $150,000 and current liabilities of $8,500.

D:
Non-current liabilities of $135,000 and current liabilities of $23,500.


Question:
A cash grain operation has sales of $70,000, seed purchases of $5,000, other costs of $40,000, an opening inventory of $40,000, and a closing inventory of $42,000.  What is the net farm income?


Question:
A business which is highly leveraged has:


Question:
A banker loaning money to farm operators may require a cash flow analysis to:

A:
Determine the profitability of a farm operation.

C:
Reduce the farmer's chance of obtaining a loan.


Question:
A farmer purchased feeder pigs averaging 50 pounds each and sold them as slaughter hogs with an average weight of 200 pounds.  The feed costs were $51.00 per hog.  The feed cost per pound of gain was:


Question:
To consider the time value of money in analyzing alternative farm investments, one should choose the investment that offers the:

B:
Most total profits over the lifetime of the investment.

C:
Highest average profits over the investment lifetime.


Question:
An $80,000 loan amortized at 9% interest for 10 years has annual payments of $12,465.61. How much total interest is paid over the life of the loan?


Question:
If 55-pound feeders pigs are purchased for $.60 per pound and sold at 230 pounds for $.32 per pound, the breakeven cost of production per pound is:


Question:
If consumers buy more beef because beef prices have decreased, and nothing else affects the market, there has been:


Question:
A feedlot operator buys feeder steers, finishes and sells them. The operator estimates that the finished steers will sell for $66 per cwt. And that it cost $150 per head to bring them from 780 pound purchase weight to the 1100 pound selling weight. What is the breakeven price the operator can pay for the 780 pound feeder steers?


Question:
A legal document by which a property owner transfers the title of his land to someone to manage and safeguard for the benefit of beneficiaries is a:


Question:
The effect of appreciation 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 a smaller added expense value in the cash flow statement.

C:
Will be accounted for by a smaller cash expense value in the cash flow statement.

D:
Is not shown on the cash flow statement.


Question:
The producer of a commodity which has an inelastic demand knows that:

A:
If less is produced by the industry, total industry revenue will increase.

B:
If more is produced by the industry, total industry revenue will increase.

C:
If the price of the commodity increases, industry revenue will decrease.

D:
The price of the commodity has no effect on the total industry revenue.


Question:
A cash flow budget or projection indicates:

A:
The ability of a business to generate cash inflows to meet cash demands during a specified period of time.

B:
The net worth of the business at a particular point in time.

C:
The profitability of the farm business for a specified period of time.

D:
The return to labor and management for a specified period of time.


Question:
A farmer is considering changing from a cash grain farm to a cotton farm.  Grain receipts will be reduced by $9,000 and grain expenses are reduced by $4,000 by the change.  Cotton receipts would be $21,000 and cotton expenses would be $12,000.  If he made the change his returns would:


Question:
If the Smiths hedge their potato crop, and they make the predicted yield and their costs do not change, they will:

A:
Make a lot more money if the price goes up.

C:
Make more or less profit depending on the degree and direction of a price change.

D:
Make almost exactly what they predicted no matter how low or how high the price fluctuates.


Question:
The total harvesting costs associated with a field of melons are $250 per acre.  Total production costs incurred before harvest have been $300 per acre.  Expected yield is 75 cwt (hundred weight) per acre.  What is the minimum market price per cwt. for cantaloupes necessary for the farmer to harvest the crop?


Question:
What is the net return to land, if the interest rate is 10% and the capitalized value of land yields $50 per year?


Question:
In developing an enterprise budget, crop insurance should be considered as:


Question:
The process of finding the present value of a dollar to be received at some future date is known as:


Question:
A supplementary relationship is one in which an increase in production of one output:

A:
Increases the production of the other output.

B:
Does not affect the production of the other output.

C:
Decreases the production of the other output.

D:
First decreases and then increases the production of the other output.


Question:
Which of the following does not appear on the balance sheet?


Question:
An $80,000 loan amortized at 9% interest for 10 years has annual payments of $12,465.61. If the 10th and final payment includes $1,029.27 of interest, what was the outstanding principal balance after the 9th payment?


Question:
When borrowing money on the discount method, interest is:

A:
Charged on the unpaid principal balance.

B:
Calculated on the total amount of the loan and then subtracted from the principal balance.

C:
Charged on the original loan amount and added to the principal balance.

D:
Calculated and paid at the end of the loan repayment period.


Question:
Dale Dairyman thinks that the  price of milk for next fall looks poor to him.  To hedge his price, he should:


A:
Get the final line on the tax return to zero


Question:
The nearby hog futures contract closed at $49.80 with a local basis of $1.85.  The local cash market was:


Question:
A farmer has total assets of $500,000 of which land is $300,000. The farmer's debt: equity ratio is 1.0.  What will the farmer's debt: equity ratio be if the lender devalues the land by 30%?


Question:
The method for determining the repayment capacity of a farm or ranch business is to:

A:
Project net worth of business for the end of the year.

B:
Determine the rate of return to the farmers equity capital.

C:
Determine the net return to land, labor, and management.

D:
Determine the amount of debt the farm can handle.


Question:
In preparing a cash flow projection for the coming year, a farmer estimates that cash inflows exceed total cash outflows for the month of June.  This indicates that:

A:
Net farm income will be higher than last year.

B:
Family living expenses should be reduced during the month of June.

C:
Cash will be available to reduce the operating loan in June.

D:
The operating loan will likely increase during the month of June.


Question:
What type of insurance protects the farmer from lawsuits if he/she is responsible for personal injury or property damage to another person?


Question:
Specialization in crops or livestock in a farm business tends to:


A:
Separates taxable income from nontaxable income.

B:
Differentiates between the value of the operator's labor management and capital.

C:
Involves keeping separate records of receipts and expenses for each individual product or class of products.


Question:
When developing a cash flow projection, a farmer's unpaid labor should:


Question:
If pork and poultry are substitutes for each other, an increase in the demand for pork can be created by:

B:
A decrease in the production of poultry.


Question:
Returns paid to members of a cooperative based on volume of business transacted is:


Question:
When using options, the futures price you want to fix is:


Question:
Operators of a farm business face several different types of risk.  Indicate the type of risk that can be managed by renting land rather than purchasing land.


Question:
In the short run, the decision to produce or not to produce should depend on whether or not the expected income will be sufficient to:


Question:
Which of the following would be a current asset on a balance sheet?


Question:
A dollar received tomorrow can be worth less than a dollar today because of:


Question:
Which of the following statements is correct about the law of supply?

A:
High price results in less product supplied.

B:
Low price results in more product supplied.

C:
High price results in more product demanded.

D:
High price results in more product supplied.


A:
They are the same -- both are subject to margin call.

B:
The cost of the option is a fixed cost, but the futures contract is subject to margin calls.

C:
The cost of the futres contract is a fixed cost, but the option is subject to margin calls.

D:
Neither is subject to a margin call and therefore they accomplish the same task.


Question:
The demand curve represents a relationship between:


Question:
A cash-crop farmer is able to rent a neighboring 100 acres of cropland for $40 per acre to farm with 400 acres he currently rents for $40 per acre and with his existing equipment.  The effect on his costs will be


Question:
A projection of all income and expenses associated with growing an acre of a particular crop would be called:


B:
The buyer may, but is not required, to sell a corn futures contract at a set price.

C:
The buyer may, but is not required, to buy a corn futures contract at a set price.


Question:
The financial ratio that is used to express a return on farm assets per dollar of total income and that defines profit as a percentage of total revenue.


Question:
If a hedger is to carry a hedge through to completion, the hedger:

B:
Must always deliver the hedged commodity to the local elevator.

C:
Must be prepared to meet all margin calls.


Question:
A farm manager with a 2:1 debt/equity ratio who is in need of a high level of life insurance protection per dollar of premium should purchase:


Question:
A farmer places too low a value on his stored corn in his closing inventory.  His debt-to-equity ratio is:


A:
A dollar will buy more in the future than it will today.

B:
The prices at which the interest rate will equal the inflation ratio.

C:
The farmer's profit margin will increase over time due to high prices.

D:
A dollar will buy less than in the future than it will buy today.


Question:
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.


B:
Interest that has accumulated since the last loan payment.


Question:
A livestock producer wishing to use futures markets to hedge the price of grain to be purchased in the future would initially:

A:
Buy futures contracts expecting to sell the contracts when he buys the grain.

B:
Buy futures contracts expecting to buy more contracts when he buys the grain.

C:
Sell futures contracts expecting to buy them back when he buys the grain.

D:
Sell futures contracts expecting to sell more contracts when he buys the grain.


Question:
The adjusted basis of depreciable property for tax purposes is best defined as:

B:
The cash boot paid regardless of the value of the trade-in.


Question:
The speculator is important in the futures market because the speculator:

B:
Accepts the price risk the hedger is seeking to avoid.

C:
Always takes the long position in the market.


Question:
The financial ratio that shows the percentage return on total investment of the business.


Question:
The financial ratio that compares total dollars of debt to total dollars of assets.


Question:
Current December milk futures are trading at $18.50 / cwt (hundred pounds) and your historical basis for December has averaged $1.65.  You expect a volume premium of $0.60 and a somatic cell count premium of $0.50.  You would expect your mailbox price to be:


Question:
Crop insurance, hedging, options, and liability insurance provide a means of:


Question:
Assume an acre of land will produce an average net return to land of $40.00. A farmer wants a 7% return to land. What is the maximum the farmer can pay for an acre of this crop land?


Question:
A farmer has liabilities of $456,000, and assets totaling $658,000, of which machinery is $240,000.  What will the farmer's debt/equity ratio be if the lender devalues the machinery by 10%?


Question:
The funds available to purchase inputs and inventory items after the sales of current farm assets and payment of all current farm liabilities is known as:


Question:
An increase in the demand for beef with no change in beef production or other factors will:

A:
Decrease the price for beef and increase demand for feed.

B:
Decrease the prices for pork and poultry.

D:
Reduce beef prices and increase pork prices.


Question:
An elevator quotes the price per bushel of soybeans at "25 cents under November futures."  What do futures have to sell for to provide a cash price of $7 per bushel?


Question:
A local elevator quotes corn at 20 cents under March futures, and will pick up the grain for free. A terminal quotes 5 cents under, but it costs 10 cents to haul it there. If March futures sells for $3.25, where can you get the highest net price, and how much is it?


Question:
In July a farmer sells November futures at $7.35 to hedge new crop soybeans. At harvest, the farmer buys back the contract for $6.85, and sells July futures for $7.15. What is net futures selling price for the July contract?


Question:
Costs that are incurred and must be paid whether or not production takes place are:


Question:
The difference between a cash price at a particular location and a specified futures contract price is called:


Question:
A farmer can produce 100 bushels of wheat per acre with 100 lb. of commercial fertilizer. A second 100 lb. of fertilizer will produce an additional 20 bushels of wheat. A third application of 100 lb. of fertilizer will increase production by 10 bushels, and a fourth 100 lb. will add 5 bushels of wheat to total production. If each 100 lb. of fertilizer costs $15.00, and a bushel of wheat is worth $2.75, how many pounds of fertilizer should be used to maximize net income?


B:
Rate at which nitrogen fertilizer dissolves in wet soil.

C:
Value of total assets relative to the amount of total debt.

D:
Ability of a farmer to pay current debts with available cash flow.


Question:
A feedlot operator buys feeder steers, finishes them, and sells them. The operator estimates that the finished steers will sell for $80 per cwt, and that it will cost $250 per head to bring them from the 700 pound purchase weight to the 1100 pound selling weight. What is the highest price the operator can pay per hundred weight for 700 pound feeder steers to break even?


Question:
A grain combine can be purchased for $90,000. Total annual fixed costs will be $12,000, and variable costs per acre will be $10 per acre. If a custom operator can be hired to combine grain for $25 per acre, what is the minimum number of acres one should plan to harvest to justify buying the combine?


Question:
The financial ratio that shows the relationship between borrowed and owned capital.  A measure of solvency.


Question:
The financial ratio that measures the relatinship of the farm's net worth (owner equity) to total farm assets.


Question:
The tax you owe on each additional dollar of taxable income is called the:


Question:
On March 1, a farmer borrowed $25,000 to buy seed and fertilizer. On December 1, the farmer repaid the $25,000 along with $1,828.13 interest. What is the annual interest rate of the loan?


Question:
A farmer has a $50,000 loan amortized at 9% interest for 15 years.  The loan's yearly annual payment is $6,203.  How much of the first year's payment is principal?


Question:
The legal document which describes the possession and ownership of real property is called a:


Question:
Which of the following would be classified as a current asset?


Question:
As output is increased, Average Fixed Costs will:

D:
Decrease over a range of output then increase.


Question:
Which of the following can be depreciated for tax purposes:


Question:
Your banker tells you that your loan will be amortized. This means:

B:
You pay all the interest at the end of the loan.

C:
Interest is calculated on the original amount of the loan and added on.

D:
There will be more than one payment on the loan.


Question:
Which of the following is a current asset?


Question:
The best way to analyze changes in per-acre costs and returns resulting from changing the type of irrigation system in a sweet corn production enterprise would be to use:


Question:
As more and more of a variable input is used in combination with one or more fixed inputs, the marginal
physical product will eventually:


Question:
The rate of return on owner equity invested in a farm business is found by;

B:
Dividing return to capital by total asset value.

C:
Subtracting total liabilities from total asset value.


Question:
A legally enforceable agreement between two or more individuals is called a:


Question:
A milk futures floor price may be established by:

A:
Selecting a put option strike price of $17.00 minus the premium of $0.50 for a floor of $16.50.

B:
Selecting a put option strike price of $12.00 and selling a put option for $3.00 for a floor of $15.00.

C:
Exercising your right to sell your milk at the local processing plant for their established price.

D:
Buying out your neighbors hedging account when they decide to exit the dairy industry.


Question:
The financial ratio that shows how much of gross farm income is retained in net farm income is:


C:
Assets pledged to guarantee debt repayment.


Question:
Assume you own a square 160 acres of land (a standard quarter section). If there are no fences on the land and fence costs $1,250 per mile, what would be the minimum cost of fencing it into two 80-acre pastures:


Question:
For a farm operation, the best indicator of the size of the business is:


Question:
In preparing an enterprise budget, one should not include the following:


Question:
Successive increases in irrigation water used per acre of cotton results in smaller and smaller increases in cotton lint production.  This illustrates:

D:
The Law of Diminishing Marginal Returns.


Question:
If a farm business is organized as a corporation, a stockholder:

A:
May lose only his own investment in the corporation.

C:
May be held responsible for all business debt.


Question:
If the price of a commodity increases, we would normally expect:

A:
Consumers to buy more and producers to supply more.

B:
Consumers to buy less and producers to supply more.

C:
Consumers to buy more and producers to supply less.

D:
Consumers to buy less and producers to supply less.


Question:
A feedlot owner who wants protection from increases in the price of corn which must be purchased six months from now should:


Question:
If the price of an agricultural commodity is artificially set below the equilibrium market price, the result will be a:


Question:
Marginal cost is the additional to total cost of:


Question:
The best measure of what a farmer has available for annual living expenses, debt payments, and for additional investment is:


Question:
The amount of net income that has accumulated in a farm or ranch business (and not been withdrawn) since the business began is called:


Question:
The amount of corn and soybean oil meal in a growing-finishing ration which will minimize the cost of producing 100 lb. of gain in hogs is determined by:

C:
The prices of both corn and soybean oil meal.

D:
The price of minerals included in the ration.


Question:
Which of the following is not a variable cost?


Question:
As the term is used in futures markets, "the basis" is:

A:
The cash price in Chicago mercantile Exchange.

B:
The difference between the futures price and local cash price.

C:
The current futures price minus production costs.

D:
The difference between the government's target price and the cash price.


Question:
A market structure which has a single seller producing and marketing a product, is an example of a:


Question:
Machinery and other durable equipment are classified on the Balance Sheet as:


Question:
A rancher borrows $50,000 and pays it all back in 9 months along with $4,125 interest due on the loan. What was the interest rate on the loan?


Question:
The asset purchase price minus all accumulated depreciation is called its:


Question:
One difference between real and personal property is

B:
Real property is temporary or moveable property.

D:
Only real property can be collateral for a loan.


Question:
The difference between total assets and total liabilities is:


Question:
If as a result of a 1% price decline for a commodity, the quantity demand increases 0.5%, that commodity is said to be price:


Question:
A person who owns, manages, and receives all the profit from a business is called a:


Question:
An example of an long-term liability is:


Question:
The marginal cost curve above minimum average variable cost is the individual firm's:


Question:
Wheat yields an average of 35 bushels per acre while sunflower yields an average 15cwt. per acre. Production costs for wheat are $116.00 per acre and for sunflowers are $121.00 per acre. If the price for wheat is $3.65 per bushel, what would the price per cwt.of sunflowers need to equal the net return for wheat?


Question:
The ability of a farm business to pay all of its debts if it was liquidated at a given point in time is:


Question:
A farmer owns a 10,000 bushel grain bin and is deciding whether to store or sell this year's crop. The farmer should store the crop if the:

A:
Current cash price does not cover the production costs.

B:
Future price will probably be the same as the current cash price.

D:
Future price exceeds the cash price by at least enough to cover variable storage costs plus interest and
shrinkage.


Question:
A feed dealer makes a credit charge of 1.5% monthly on all bills not paid by the 10th of the month. The annual interest rate would be:


Question:
A farming operation has sales of $600,000, operating expenses of $500,000, opening inventory of $400,000, and closing inventory of $320,000. What is the net farm income from this operation?


Question:
Before harvest, a farmer has spent $20 per acre for labor, seed, and machine costs on oats. The market price is $1.50 per bushel and the expected yield is 20 bushels per acre. The oats can be harvested for $8.00 per acre. The farmer should:

A:
Assume a $20 loss for the year and leave the oats in the field.

C:
Sell the oats crop for pasture of $25 per acre.

D:
Sell the oats crop standing in the field for hay at $27 per acre.


Question:
When a farmer increases an investment in buildings and equipment for the dairy enterprise without increasing the total units of production, the cost per unit of production:


Question:
A farmer earned $10,000 from farming last year. The farming operation controls $150,000 of assets and $50,000 in liabiilities. What was the farmer's rate of return on equity (ROE)?


Question:
A difference between buying or selling a futures contract and buying a put or a call option is:

A:
The cost of the futures contract is fixed, but the option is subject to margin calls.

B:
The cost of the option is fixed, but the futures contract is subject to margin calls.

C:
No difference-both are subject to margin calls.

D:
No difference-neither is subject to margin calls.


A:
The net profit or net loss realized on an investment

C:
A number that represents your ability to meet all debt

D:
Something that farmers never figure because it's alwas too low


Question:
The money used to insure performance of a futures contract is called:


Question:
A business has a debt-to-equity ratio of 2:1. The non-current liabilities total $90,000 and the current liabilities total $50,000. What is the value of the assets?


Question:
Expenses that have been incurred but not yet paid are:


Question:
Renting farmland on shares of production rather than cash results in:

A:
Less risk for the landlord and more risk for the tenant.

B:
More risk for the landlord and less risk for the tenant.

C:
More risk for both the landlord and the tenant.

D:
Less risk for both the landlord and the tenant.


Question:
The financial condition of a business at any point in time is portrayed in:


Question:
If a field of canola produced 9 cwt. Per acre and the fixed costs of production were $50.50 per acre and the variable costs were $23.75 per acre, what was the total cost per cwt. Of canola produced?


Question:
A ratio that measures the liquidity of the business is the:


Question:
If the demand for food is relatively inelastic, a one percent increase in the price of food will result in a:

A:
More than one percent increase in the quantity demanded.

B:
Less than one percent increase in the quantity demanded.

C:
More than one percent decrease in the quantity demanded.

D:
Less than one percent decrease in the quantity demanded.


Question:
A line-of-credit loan to purchase fertilizer is:


Question:
A farm manager is considering the purchase of a used combine. The machine would have fixed costs of $12,500 per year and variable costs of $15 per acre. The local custom rate is $25 per acre. How many acres per year must be harvested to justify the purchase?


Question:
By adding a poultry enterprise to a crop farm, a producer becomes more:


Question:
When the futures prices moves closer to the cash price:

D:
Futures makes less money for the hedger.


Question:
A farmer can rent an additional 100 acres without having to purchase additional equipment.
The effect on costs will:


Question:
The process of determining the present value of future income is:


Question:
When considering the addition of an enterprise to an existing farm operation, one should choose the enterprise that:

C:
Produces the largest increase in gross receipts.

D:
Shows the highest net returns to the available resources.


Question:
Over 95% of a ranch's cash flow cash inflows come from calf sales.  What can the manager do to protect that potential cash flow?


Question:
A measure of profitability of your farm business is:


Question:
A decrease in the value of the U.S. dollar relative to the currency of other countries should result in:


Question:
Calculate the first year payment on a constant principal/decreasing payment loan for $240,000 over 20 years at 9% interest.


