ABM Exam – Flashcard

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Firms that provide inputs to the farmers.
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Aggie Input Suppliers Ex) Monsanto
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Firms who produce RAW food and Aggie commodities
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Producers Ex) Iowa Corn Farmer
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Firms who buy RAW COMMODITIES from producers
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Assemblers Ex) Archer Daniels Midland (ADM) Bunge
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Firms who buy raw Aggie commodities and PROCESSES THEM INTO FOOD INGREDIENTS
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Initial Processors Ex) ADM Bunge *Cargill***
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Manufacturer that buys ingredients and manufactures them into food products
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Food Manufacturer Ex) Kellogg's Coca-Cola
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Firm engaged in distributing food products
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Wholesalers TWO TYPES 1. Institutional Ex) GFS 2. Grocery Ex) SpartanNash
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Firms from whom consumers buy food
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Retailers Ex) Kroger Meijer's
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People who eat food
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Consumers Ex) Me
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Time Value Added
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Value that allows production & consumption at different times ( by storage )
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Place Value Added
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Value by transportation to the location of the next player
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Form Value Added
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Changing the form of the product
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Possession Value Added
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Value by facilitating exchange between buyers and sellers
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Food Bill
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Value of all total food & alcohol Trend: Increasing
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Food Dollar
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Total annual market value for all purchases of DOMESTICALLY produced food (Two types: value by Aggie input supplier & value by farmer (farm share))
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Food dollar is Value Added ____ the domestic farm gate
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After
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Food Marketing Bill
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Total dollar expenditures going to Aggie & food marketing firms to pay for all marketing PAST THE DOMESTIC FARMGATE Trend: Increasing
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Most food products go through ___ changes of possessions
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5-7
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On average, how far does food travel?
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1000 miles
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What are the types of Value Added? What are they each?
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Time - value by storage Form - value by changing Place - value by transportation Possession - value by facilitating exchange
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What is the food bill?
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Value of all total food and alcohol expenditures in a given year
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What is the trend of the food bill and what is its most recent number?
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INCREASING $ 1.6T
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The average American spent how much in the food bill?
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$5,000 including alcohol, 4,500 without
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What is the food Dollar?
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Total annual market value for all purchases of DOMESTICALLY produced food.
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What is the food Dollar split into?
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Farm share - Value by farmer and Aggie input supplier Food marketing bill - Value Added by firms after the domestic farm gate
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What is the food marketing bill? It's trend?
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Total dollar expenditures going to Aggie and food marketing firms to pay for all marketing past the domestic farmgate. INCREASING
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Since 1995 the farm share has been about what percent? New numbers estimate it at what????
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20%, NOW 15-20%
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What is the farm share for food consumed away from home? Why?
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5%. Marketing share has been increasing a lot faster than farm share.
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What costs go into the FMB?
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Labor Packaging Transportation Energy
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What is the average distance food travels?
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1000 miles
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More processed food do what to the farm share?
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Decrease it
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Seasonality costs do what to the farm share?
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Decrease it
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Transportation costs do what to the farm share?
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Decrease it
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Bulky perishable items have what kind of farm share?
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Large
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Food Dollar Expenditures
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Total annual market value for all purchases of DOMESTICALLY PRODUCED GOODS
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Food consumption SHARE trends have been _____ but have been relatively _____ since 2000
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Declining but relatively stable since 2000
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What is the trend for how much we spend on food?
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Upwards trend $1.63T
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What are the reasons of why we spend more on food?
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Population increase -- High food prices due to labor and energy -- Preferences of new food products and marketing services
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The average American eats how many calories per day?
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3500
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Swing in the farm price lead to small impacts on food price. Why?
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The long chain is not affected by a small link.
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What is the trend in food preferences
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More processing More marketing 1/2 of food away from home 1/3 consumed away from home = Value Added trend
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Food expenditures from population growth "mature" market means what?
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More mature consumers, Rising income, And more diversity.
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Will catering to the baby-boomer generation change the US spending on food? Why?
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YES because upgrades in diets and reduction in the percentage spent on food
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What are functional foods
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Foods to provide medical benefits beyond traditional nutritional benefits ex) Vitamin D Milk
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Milk has been trending way ____ While cheese has been trending way ____
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Down Up
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Name the top 5 countries in soil available for food production
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1. 🇺🇸 2. 🇮🇳 3. 🇷🇺 4. 🇨🇳 5. 🇧🇷
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Name the impacts of geographical factors
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-Increases place value - production, processors concentrated in production region -wholesalers concentrated in consumption region
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Name the impacts of biological factors
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-Production Lags: the length of time which the decision to produce occurs until the production reaches the market: chicken 5-7 days, nuts 5-7 years -perishable -quality variation -risks
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Name the impacts of biological factors
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Decisions must be made on expected prices and expected yields
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Geological factors increase what type of value added?
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Place
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Biological factors increase what type of value added?
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Time value Form value
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Name the impacts of capital factors
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(Requires a high degree of asset specificity) -lag in adjustments -influenced heavily by macroeconomics such as inflation
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What is the impact that tech provides?
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Firms face the constant pressure of continually reducing costs and continually adopting new tech
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Seasonality of supply
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Batch production
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Seasonality of demand
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Tastes and preferences throughout year
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What do seasonality factors impact?
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Storage costs Handling costs
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What percentage of US land is used for food and fiber production?
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50% 20% in crops 25% in rangeland 5% other
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What are the impacts of increased productivity?
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-Changes in farm structure -Increases specialization -increased globalization -tighter coordination -increased concentration
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What percent of farms are family owned?
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97-98%
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Large scale farms make more than $1B dollars. True or False?
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False. They make more than 1 million... not billion.
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What percentage of farms are made up by small farms?
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90%
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Small farms own more than ____ of all farm assets (ex. Buildings)
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1/2
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True or false, small farms make up less than 25% of Aggie output
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False. 26%.
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Mid scale and large scale farms make up what percent of all farms?
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8%
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What percent of total value of production does mid scale and large scale farms make?
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60%
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Non family farms make up almost ___ percent of all farms. They make up ____ percent of the total value of farm production
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3% of farms 15% of farm value
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What is asset specificity?
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Assets that can only be used for farm/food production or processing
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Mid-scale and large scale farms account for what percentage of farm production?
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75%
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What is the current trend in farms?
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Increasing size
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Name the increased impacts in farm structure
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Increases Specialiazation - Increased Globalization - Increased Market coordination - Increased concentration
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What percent of exports are Aggie related in the USA?
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10%
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Nearly what percent of USA agriculture is exported?
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nearly 25%
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The USA is the leader in exports and second in imports. T or F?
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False! We are #1 in both.
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What is the current shift in market coordination
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Shifting away from production of commodities towards food products
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More coordination in the market does what?
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Make players more independent
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What is the difference between market concentration and geographic concentration?
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Market: smaller number of firms or players in the industry Geographic: production and allied industry located close to one another
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The Michigan Automobile industry is an example of what?
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Geographic concentration
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What is the CR4
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"4 firm concentration ratio" It is the percentage of industry sales by the 4 largest firms
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What is a benefit to consumers of having larger players?
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Larger players can ship to you for lower prices
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What is the difference between demand and quantity demanded?
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Demand is the quantity buyers will buy at various prices and all possibilities -- Quantity demanded is the quantity demand at a specific price
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A change in quantity demanded...
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Is a movement along the demand curve
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What can change Quantity and Production?
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Substitutes Complements Income Preferences Expectations # of consumers
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What changes Market supplied?
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Price of input supplies Tech changes Bio/Climate changes Expectations # of suppliers
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An increase in supply moves in what direction?
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Right
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What is the largest portion of the Food Marketing Bill? ⭐
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Labor
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How many times does an object change possession before it reaches the consumer? ⭐
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5-7 times
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What is the largest circle in the food diagram? ⭐
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Food Bill
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What is the line that separates the imports from the rest of the food bill? ⭐
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Food Dollar
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What is the outter layer (not the line but the stuff in between) of the food diagram?⭐
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Imports
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What is the inner circle of the food diagram? ⭐
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Food Marketing Bill
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What is the larger part of the dashed line in the food diagram? ⭐
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Services, Supplies, and Inputs
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What is the smaller part of the dashed line in the food diagram? ⭐
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Farm share
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Fresh Produce and Dairy products are the most common sources for food Bourne illnesses.⭐
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True
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Processors tend to locate their facilities near agricultural production regions ⭐
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True
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The farm share of the food dollar has been less than 16 cents of the dollar since 2000⭐
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True
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Less that 25% of the land in the USA is used to produce food and fiber ⭐
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False
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Both the demand for food products and the supply of food products are relatively stable throughout the year ⭐
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False
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Over the next twenty years dairy products are projected to have a decrease in per capita consumption⭐
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True
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There is an increasing trend in real retail food prices ⭐
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True
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Increasing incomes are leading to more emphasis placed on product price and less emphasis placed on food quality attributes ⭐
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False
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Approximately 1 outta 2 meals is consumed away from home ⭐
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False. 1/2 of food expenditures areaway from home but notconsumed away from home.
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The US food market is a mature market which means that growth in the food market will come from older Americans eating more food.⭐
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False
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There is little quality variation in fruits and vegetables.⭐
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False
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Commodity prices at the farm level are the most important factor in determining consumer food prices and choices ⭐
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False
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The share of US income that US consumers spend on food has been decreasing ⭐
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True
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Due to biological nature of food production, Aggie firms are able to quickly contract in order to adjust to price signals in the market ⭐
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False
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Increased importance will be placed on functional foods ⭐
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True
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Agricultural producers are quickly able to adjust to market price signals ⭐
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False
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Since 2000, the share of income spent on food has been rapidly decreasing ⭐
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False
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If the farm share of the food dollar is decreasing then farming is becoming less profitable. ⭐
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FALSE
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Institutional Wholesalers typically do NOT sell to food service retailers⭐
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FALSE
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There is an increasing trend in both the food bill and the food marketing bill ⭐
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True
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Approximately 50% of all jobs in the USA are related to some aspect of the agri-food system ⭐
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False
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The farm share of the food dollar has been decreasing over time ⭐
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True
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If the price of milk doubles, then the proce of ice cream doubles ⭐
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False
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Value Added = price sold - cost to enhance ⭐
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True
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Sams club is an example of an institutional Wholesaler. ⭐
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False
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The average food product travels approximately ____ - _____ miles before reaching the consumer. ⭐
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1200-1500
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Selling Syngenta's corn seed to a corn farmer is an example of what player? ⭐
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Aggie input supplier
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Which value Added is performed when a company transporting wheat from the elevator moves it to the manufacturer for milling? ⭐
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Place
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Wholesalers and assemblers merging is a current trend in agribusiness. ⭐
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False
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Increasing domestic population is the best reason for an increasing trend in the food marketing bill ⭐
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True
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A commodity processor would likely sell a product like cocoa powder ⭐
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True
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What portion of the food dollar is considered farm share?⭐
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15-20%
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JBS is an example of what player?⭐
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Initial provessor
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An apple processing plant takes apples, turns them into juice, and transports them in their own trucks. What types of value Added are added in this situation? ⭐
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Form and Place
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A firm whose primary business is to buy small and sell large without changing the form of the possession is what kind of player?⭐
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An assembler
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Wholesalers distribute food to retailers in ____
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Bulk
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Aggie input suppliers provide seeds and ____ to farmers
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Inputs
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Meijer's is a what? (What kind of retailer?)
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Food service retailer
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Farmers account for what percent of the USA population?
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<2%
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A modern supermarket typically has how many UPCs on its shelves
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40,000
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Michigan is not #1 in what area? Blueberries Milk Cucumbers Black beans Cherries
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Milk
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In terms of Aggie diversity Michigan ranks what?
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#2
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What share of of the food dollar do farmers earn (in cents?)
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6-8 cents
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The food and fiber marketing system accounts for what percent of the US labor force?
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20-25%
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In Michigan, which commodity accounts for the highest cash receipts? Soybeans Milk Need Corn
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Milk
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The top USA chain restaurant, based on value of sales is
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McDonald's
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What industry is the largest user of sugar in the USA?
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Cereal
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Nearly 90% of US breakfast cereal is produced by the 4 largest food manufacturers
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True
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About 160,000 farms in the USA produce most of the food we eat.
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True
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Coke outsells Pepsi but makes less total money than pepsi
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True
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Brazil has the world's largest ethanol industry
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True
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If the price of milk doubles then the price of ice cream doubles
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False
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Nearly 1/3 of food produced for human consumption is wasted
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True
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Farms are shifting away from production of homogenous commodities towards production of commodities with specific end use attributes ⭐
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True
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If ice cream and popsicles are substitutes, one would expect a decrease in the price of ice cream would cause the demand of popsicles to increase ⭐
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False
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A potential benefit to consumers of market concentration in the agri food system is that latger firms may be able to exercise market power ⭐
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False
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Japan has typically been in the top four export destinations for USA Aggie and food exports ⭐
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False, they're #5
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Most farms in the USA are non-family farms ⭐
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False
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In the 20th century, labor was the primary driver of increased Aggie productivity at the farm level ⭐
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False
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The clustering of fruit production and processing in the Traverse Bay Area is an example of market concentration ⭐
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FALSE, geographic concentration
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If a surplus exists in the market, then there is downward pressure on price ⭐
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True
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Would a shift in the supply of milk be caused by a change in the price of hay used to feed cows? ⭐
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Yasss
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The USA has a negative Aggie trade ⭐
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False
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Geographic concentration which leads to increased efficiencies in the market channel is considered an impact in increased what?⭐
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Tech
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If corn is an input for chicken production, and its price dropped, how would dat effect da chicken market?⭐
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Da supply curve shifts dog, decreasin price and increasin quantity traded in da market
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Small scale farms account for less than 25% of all farms assets ⭐
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False, 50%
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If a new production of technology reduces tge cost of producing sugar beets, the supply curve for sugar beets will likely decrease ⭐
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False
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If Tyson owned 1/3 of the sows in the USA then what would be one benefit for the consumer? ⭐
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It decreases costs per unit of production and processing
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Keep studying
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Gotta keep studying
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