question

Value- Added

answer

Refers to the difference between the cost of goods purchased and the price for which the firm sells those 'enhanced' goods.

question

Approximate # of all jobs in the U.S related to some aspect of the agri-food system

answer

20-25%

question

Approximate value of total expenditures on food and alcohol in the U.S

answer

$1 to $1.4 trillion

question

Current trends in the agri-food system

answer

Processors are also becoming food manufacturers. Major/Large grocery retailers are acting as their own wholesalers. Initial processors are dealing more directly with producers and decreasing the role of assemblers.

question

NOT a current trend in agri-food system

answer

Consumers dealing directly with processors and reducing the role of wholesalers.

question

Assembler: Example

answer

A grain elevator who buys small quantities of corn from farmers and sells large quantities of corn to the next player.

question

Least likely to add form value?

answer

The wholesaler.

question

Institutional wholesalers typically sell to:

answer

University cafeterias, restaurants, hospitals.

question

Institutional wholesalers typically do NOT sell to:

answer

food retailers.

question

An agri-food firm who takes commodity wheat, stores it in grain bins, and then turns it into wheat flour primarily adds what type(s) of value?

answer

Form and Time

question

A commodity processor would most likely sell:

answer

Wheat flour to Kraft Foods.

question

Economic Stage

answer

Any value-adding process that moves the product closer to final consumption.

question

A barge that loads grain from elevators in Minnesota and transports it down the Mississippi River to the Gulf of Mexico is primarily adding:

answer

Place Value.

question

Which tool would you use if you wanted to determine how much US consumers spend on all food and alcohol in a given year?

answer

The Food Bill.

question

On average, Americans spend less than __% of their disposable income on food.

answer

10%

question

Both real retail food prices and the Food Bill have been _____ over the past twenty years.

answer

Increasing.

question

Approximately __% of total food expenditures is for food purchased away from home.

answer

50%

question

____ incomes are leading to _____ total food expenditures.

answer

Increasing, increasing.

question

Food manufacturers tend to be located __ agricultural production areas rather than near final consumption regions.

answer

Near.

question

In general, Americans have one of the ___ shares of income spent on food in the world.

answer

Smallest.

question

Beginning in the mid 1990's, which item replaced food as the largest single item in the average family budget?

answer

Health care.

question

In $100 of retail food, the value added BY FARMERS is approximately ___. Note- the value added by farmers is NOT the same thing as "farm value."

answer

$6-$8.

question

What would likely lead to a larger farm share of the food dollar?

answer

A food item that is highly perishable, like milk or eggs.

question

Processors tend to locate their facilities ___ agricultural production regions.

answer

Near.

question

Given the changing demographics in the US, what is very unlikely to occur in the US over the next twenty years?

answer

Baby boomers growing older and being more likely to eat out than younger Americans

question

The value of total expenditures on food and alcoholic beverages in the US is approximately:

answer

$1 to $1.5 trillion

question

Consumption trend in the US agri-food system over the past 20 years or so

answer

The share of income that US consumers spend on food has been decreasing.

question

Approximately what quantity of food is consumed away from home?

answer

1 out of every 3 meals (33%)

question

Most farms in the US are ____

answer

Family owned and operated.

question

A ____ in the price of fertilizer used in corn production will cause an ______ in the supply curve for corn.

answer

decrease, increase.

question

If a surplus exists in the market, then there is a _____ pressure on price.

answer

Downward.

question

If ice cream and popsicles are substitutes, one would expect that a decrease in the price of ice cream would cause the demand for popsicles to

answer

Decrease

question

What country is considered one of the top countries from which the US imports agricultural and food products?

answer

European Union.

question

In 2008, the world's largest confectionery company was formed when the Mars Company acquired Wrigley for $23 billion. The growing market concentration in the confectionery industry may be a concern to consumers if the confectionery firms in the industry begin to:

answer

Exercise market power.

question

Assume that an early frost destroys much of the fresh orange crop in Cali. This event will most likely affect the market for fresh oranges in the following way:

answer

Shift the supply curve, increasing the price and decreasing the quantity traded in the market.

question

Demand Shifters:

answer

Prices of substitute goods, income, tastes and preferences.

question

NOT a demand shifter:

answer

Price of the good.

question

Large scale farms account for the ____ of agricultural production in the US

answer

majority

question

If chips and salsa are complements and the supply of chips decreases, then the likely impact on the salsa market will be that:

answer

The demand for salsa will decrease.

question

The US has a positive ____ trade balance.

answer

Agricultural

question

The elasticity of demand for milk is -0.25. Therefore, an increase in the supply of milk would result in:

answer

A decrease in total revenue for milk producers

question

Assume that the elasticity of demand for Pepsi is -1.15. Therefore, if the price of Pepsi increases, the total revenue of Pepsi producers will:

answer

Decrease.

question

A cross-price elasticity would be used to measure the impact of a

answer

change in the price of a substitute

question

Suppose that, when income increases by 10%, the quantity demanded of chicken increases by 2%. One can conclude that:

answer

Chicken is a normal good.

question

Assume that the short-run elasticity of supply for orange juice is +.048. In the long-run, what do you think would be the most plausible number for the long-run supply elasticity of orange juice?

answer

+1.40

question

Assume that the quantity demanded of apples increases by 12 percent when the price of apples decreases by 10 percent. What could be considered true?

answer

The total revenue of apple producers will increase when the supply of apples increases.

question

Income elasticities may be _____ or ______

answer

positive, negative

question

If tighter trade restrictions lead to a decrease in imported avocados from the US into Mexico, what will likely be the impact on the equilibrium price and quantity in the US avocado market?

answer

Quantity will decrease and price will increase.

question

What agri-food player is typically closest to the final consumer?

answer

The manufacturer.

question

An economic stage is:

answer

Any value-adding process that moves the product closer to final consumption.

question

What would likely shift the supply of milk?

answer

A change in the price of hay used to feed dairy cows.

question

Grocery wholesalers typically sell to

answer

Food retailers

question

What player is least likely to add form value?

answer

The assembler.

question

T/F: Due to the biological nature of food production, agricultural firms are able to quickly contract and expand in order to adjust to price signals in the market.

answer

False

question

A commodity processor would likely sell:

answer

Wheat flour.

question

T/F: The Food Bill measures all of the value added in the agri-food system by firms once the product leaves the domestic farmgate.

answer

False

question

375 bags of pretzels were sold at $2.99 per bag. Later, 500 bags of pretzels were sold at $4.49 per bag. What likely occurred in the market?

answer

Demand increased.

question

The share of total food expenditures for food purchased away from home is ______

answer

Increasing

question

Approximately _____% of all agricultural production in the US is exported

answer

16-18%

question

What items would NOT be included when calculating the Food Bill?

answer

Exports.

question

What is a likely reason for the upward trend in the Food Marketing Bill?

answer

Increasing domestic population

question

Assume that research reveals that the consumption of olive oil reduces the risk of coronary heart disease. The impacts of this event on the olive oil market will be to:

answer

Shift the demand curve, increasing both the price and the quantity traded in the market.

question

Approximately what percentage of food expenditures is for food purchased away from home?

answer

50%

question

A wholesaler who stores cereal boxes and then transports them to the retailer primarily provides which types of value?

answer

Time and Place Value

question

What would NOT cause a change in the demand for peanut butter?

answer

A drought.

question

If Coke and Pepsi are substitutes and the price of Coke decreases, then the likely impact on the Pepsi market will be that:

answer

The demand for Pepsi will increase

question

Approximately, what proportion of the Food Bill is considered "Farm Share"?

answer

15-20%

question

T/F: In the 20th century, technology was the primary driver of increased agricultural productivity at the farm level.

answer

True

question

The primary customer of the agricultural input supplier is the:

answer

Farmer

question

Capital factors in agricultural production, such as the high degree of asset specificity, mean that agricultural production firms are ___ to adjust to market price changes than non-agriculture firms.

answer

Slower.

question

Farms are becoming ___ specialized and ___ diversified.

answer

more, less.

question

A current trend in the agri-food system is for the commodity processors to deal __ directly with producers and decrease the role of assemblers.

answer

more.

question

Farmers account for approximately __% of the population.

answer

2%

question

The clustering of fruit production and processing in the Traverse Bay area is an example of ___ in the agri-food system.

answer

Geographic concentration.

question

If a new production technology reduces the cost of producing corn, the supply curve for corn is likely to ____.

answer

Increase.

question

The share of income that consumers spend on food is _____.

answer

Decreasing.

question

An increase in the price of pesticides used in tomato production will cause a shift in the __________ for tomatoes.

answer

Supply Curve.

question

The ____ is the worlds largest importer of food and agricultural products.

answer

U.S.

question

A potential benefit to consumers of market concentration in the agri-food system is that larger firms may be able to ____ per unit costs of production.

answer

Reduce.

question

Both ____ and _____ prices respond to the same underlying supply and demand factors.

answer

Futures, Cash.

question

A bakery estimates that the elasticity of demand for its bread is -0.5. If the bakery raises the price of its bread by 10%:

answer

Quantity demanded will decrease by 5% and total revenue will increase.

question

Studies show that the cross-price elasticity of demand for bacon with respect the the price of eggs is -2.0. One can conclude that:

answer

Bacon and Eggs are complements.

question

Suppose that in the previous decade, the income elasticity of butter was estimated to be about +.85. Today, the income elasticity for butter is-.14. This would imply that over the last few decades:

answer

Butter has changed from a normal good to an inferior good.

question

If one wanted to estimate the impact on the beef market resulting from the drop in pork price caused by the H1N1 virus, one would need:

answer

The cross price elasticity of beef with respect to the price of pork.

question

In November, a grain elevator manager buys some corn to store over the winter. He plans to sell the corn next March. In order to hedge the corn, he should:

answer

Sell a March contract in November.

question

An inferior good is one that has:

answer

A negative income elasticity.

question

If one wanted to estimate the impact on the egg market due to a new food safety bill that increases consumer confidence regarding the safe consumption of egg and egg products, one would need to know:

answer

The elasticity of supply for eggs.

question

In futures markets, the seller of a contract:

answer

Agrees to make delivery according to the terms of the contract.

question

Suppose the price of peas goes up by 8% and as a result the quantity demanded of carrots increases by 10%, ceteris paribus. Then the cross price elasticity of demand for peas with respect to the price of carrots, is ____ and peas and carrots would be considered ___.

answer

+1.25, substitutes.

question

1990, economists estimated that the cross price elasticity between juice and pop was +1.14. Today, the dynamics in the beverage industry have changed and the new cross-price elasticity between juice and the price of soda is +.25. This would imply that, compared to the old estimate of +1.14, an increase in the price of soda pop would now lead to what type of shift in the demand for juice?

answer

A smaller shift, but still in the same direction.

question

If the rain falls during the soybean growing season in Brazil and Argentina and improves the South American crop prospects, it is likely that:

answer

The cash and the futures contract price will both decrease.

question

T/F: Futures markets are used by speculators to reduce price risk.

answer

False.

question

If ice cream manufacturers want to increase their revenue from sales, they should ___ the price if they think that demand is ____.

answer

Increase, Inelastic OR decrease, elastic.

question

The ____ a food product's share is of the consumer budget, the ___ the elasticity of demand for that product.

answer

greater, greater.

question

Income elasticities tend to be ____ for necessities than for luxuries.

answer

Smaller.

question

Price discovery

answer

The interaction of the broad forces of supply and demand which establish the market price level.

question

Most people who trade on the commodity futures market are _______.

answer

Speculators.

question

The fewer the number of substitutes for a product, the more _____ is the demand for that product.

answer

Inelastic.

question

Less than __% of all futures contracts typically result in actual delivery.

answer

5%

question

A speculator neither ______ the commodity in the futures contract.

answer

owns nor intends to own

question

If the elasticity of demand for apples is equal to -0.5, then a 10% increase in the price of apples will result in a 5% ____ in the quantity of apples.

answer

decrease.

question

The more inelastic demand is, the ___ the change in quantity when the price changes.

answer

Smaller.

question

The elasticity of demand is ___ elastic in the short run than in the long run.

answer

less.

question

If the quantity of pears demanded decreases by 10% when the price of apples increases by 7%, then pears and apples would be considered ____.

answer

Complements.

question

Most food products have an income elasticity between ____ and ____

answer

0 and +1.0

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