ABM 100 – Flashcard

Unlock all answers in this set

Unlock answers
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
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New