question

T or F: A commodities processor would take a raw commodity, such as corn, and turn it into corn syrup, whereas the food products processor would take the corn syrup and add it into Coca-Cola.

answer

True

question

T or F: According to the test, there are roughly 2 million farms in the United States today, whereas in 1915, there were about 6.5 million farms.

answer

True

question

T or F: For every $100 spent in the supermarket, about $81 goes to processing and marketing costs.

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True

question

T or F: Approximately 2% of all jobs in the United State are related to Agriculture.

answer

False

question

T or F: 40% of far operators identify their primary occupation as a non-farm occupation

answer

T

question

T or F: The largest 50,000 farms in the United States produce 50% of the farm sale production.

answer

True

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Concentration

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The degree to which a small number of firms control a large of the share of the market

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Globalization

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The expansion of business firms across national boundaries

question

Vertical Integration

answer

The combining several steps in the food system chain into a single management system is known as.

question

The majority of farms in the U.S. are which type?

answer

Small family farms

question

Between 2007 and 2012, the average farm size in IL

answer

Increased

question

Which commodities in the midwest generate most of the government payments received by farmers in the midwest?

answer

Corn and Soybeans

question

The 50,000 largest farms in the U.S. account for what % of total farm sales

answer

50%

question

On average, how much of every dollar spent in food represents the "food marketing bill"

answer

81 cents

question

USDA

answer

United States Department of Agricutlure

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ERS

answer

Economic Research Service

question

TPD

answer

Trans-Pacific Partnership

question

WASDE

answer

World Ag Supply and Demand Estimates

question

SNAP

answer

Supplemental Nutritional Assistance Program

question

WIC

answer

Women Infants and Children

question

How big is Agriculture

answer

15% of U.S. workforce, 2% of workforce in farming

question

American farmers feed

answer

200 people

question

What is the Ag Industry?

answer

4 Sectors; Producers, Farm Service, Processors, Marketers

question

Producers

answer

Produce food and fiber

question

Farm Service

answer

Provide the inputs of production

question

Processors

answer

Take raw products and make food products

question

Processors can be divided into 2 groups

answer

Commodities & Food products processors

question

Commodities processors

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Example: Milling wheat into flour

question

Food products processors

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Example: Bakers who turn flour into bread

question

Marketers

answer

Selling and promoting products

question

For every $100 dollars spent at the supermarket

answer

The farm service sector accounts for $12. The production sector accounts for $7 dollars. The remaining $81 dollars goes to the processors of commodities and marketing.

question

Number of farms has fallen

answer

1915: 6.5 billion Now: 2.1 Billion

question

Average size of farms has grown

answer

1945: 200 acres Now: 434 acres

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What is a farm?

answer

A "Farm" is defined by $1,000 in sales of ag products in one year.

question

Average yearly income for US Farms

answer

$187,000

question

Farm Ownership (Family)

answer

98% Family Farms account for 85% of Ag production

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50,000 largest farms

answer

2% of total farms account for 50% of total sales

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Beef Slaughter Industry is concentrated

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85% controlled by 4 large companies--Cargill, Tyson, JBS, National Beef

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Cereal Industry is concentrated

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87% controlled by the 4 largest companies--Kellog, General Mills, Cereal Partners Worldwide, Pepsi Company

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Small Family Farms

answer

Majority of Business owned by operator or relative. Gross Income under 350,000 per year. 90% of all farms.

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Midsize Family Farms

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Gross Income from 350,000-999,999. 6% of all farms

question

Large Scale Family Farms

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Gross Income of $1 Million or more. 2% of all farms.

question

Non-Family Farms

answer

2% of all farms

question

Who receives government payment?

answer

Approx. 38% of all farms receive payments. Commercial farms receive 62% of all payments.

question

Government payments include:

answer

Commodity grain programs, crop insurance, premium subsidies, conservation, disaster and livestock indemnity.

question

Food Marketing Bill

answer

The more processing of a product, the less farm value

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Economics:

answer

A social science that deals with the allocation of scarce resources among an unlimited number of competing alternative uses.

question

3 Foundations of Economics:

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Scarcity, Choice, Self Interest

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Scarcity:

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Makes the allocation system necessary and drives prices. 3 Categories: Natural/Biological ex. Farmland, oil, water Human ex. Labro, management, knowledge Manufactured ex. Machinery, buildings, chemicals

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Choice:

answer

Allows a decision to be made. Producers Choose what/how/how much/when to produce to maximize profit. Consumers Choose how to spend time and money to maximize utility.

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Self-Interest:

answer

This is what drives the economy. Consumers want more "stuff". Producers want more "profit".

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Free Market (Price) System:

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Finances determine all economic decisions. Advantages: Consumer freedom and efficient. Disadvantages: Financially driven, some items can't be given a price. Ex. education, military & fire protection.

question

Command System:

answer

Planning agency or government determines economic decisions, Egalitarian/Equal Opportunity. Ex. Public Education, food stamps, social security. Advantages: Guidance, spread resources. Disadvantages: Lack of freedom, Inefficiency

question

Role of Economist

answer

to know the economic model, devise rules for making economic decisions in a changing environment.

question

Economic Model

answer

Expected pattern of economic behavior

question

Perfectly competitive firm

answer

assumes that no 1 firm effects the market and we maximize profits. Ex. Farms

question

Microeconomics

answer

Individual decision maker

question

Macroeconomics

answer

Entire economic system, national or world level

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Ceteris Paribus

answer

Everything else being equal.

question

Diminishing Returns

answer

As you increase the amount of something, ceteris paribus, the additional value of that item will increase at a decreasing rate.

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Marginality

answer

Change from one unit to another. Most decisions are made on the margin, not on total production.

question

Equation for Marginal Product

answer

Change in output/change in input

question

Equation for Marginal Cost

answer

Change in cost/Change in Quantity

question

From the consumption view: (Diminishing returns & Marginal Utility)

answer

The additional utility or satisfaction of one point additional unit of a good being consumed. "Law of diminishing marginal utility"

question

From the production view: (Diminishing returns & Marginal Utility)

answer

By adding additional units to production, additional, production from each input will eventually increase at a a decreasing rate. "Law of diminishing marginal product"

question

Opportunity Cost

answer

When you choose to do something and give up another opportunity.

question

Implicit Cost

answer

Can't put a $ amount of the opportunity

question

Explicit Cost

answer

Can put a $ amount on the opportunity

question

Economic Cost

answer

Explicit cost plus implicit cost

question

Market Economics

answer

Where potential buyers and sellers interact in a perfectly competitive market.

question

Price taker

answer

Can only decide whether or not to buy or sell at the market price

question

Marketing (market economics)

answer

4 Changes of a product--Time, place, form, possession

question

Correlation-Causation Fallacy

answer

Just because 2 things are relation doesn't mean they have a cause and effect relationship.

question

Composition Fallacy

answer

What is true of the part is true of the whole. Ex. Just bc 1 person gets it doesn't t mean everyone does.

question

Post Hoc Fallacy

answer

Belief that first event causes the second is not always true. Ex. Breeding cows to calve at a certain time.

question

Zero-Sum Game Fallacy

answer

Win-win, doesn't always have to be a win-lose.

question

Marketplace

answer

Physical location

question

Market

answer

Interaction between buyers and sellers

question

Market Assumption

answer

Perfect Competition. Players are small enough that no one individual can influence market price.

question

Price taker

answer

Both buyers and sellers are price takers

question

Demand

answer

The amount buyers are willing and able to purchase. Intention to buy but not actually making the transaction.

question

Quantity Demand

answer

Actually making the transaction. Put a #/$ to it.

question

Law of Demand

answer

When price of a product is increased/decrease, less/more product will be purchased.

question

Supply

answer

Amount provided to the marketplace

question

Law of Supply

answer

When the price of a product is lowered, less the product will be supplied.

question

Equilibrium Price

answer

Point where supply and demand are equal.

question

Compliments

answer

Products that go together. Ex. Hot dogs & buns.

question

Substitutes

answer

Goods that can be changed for one another.

Ag Econ Chapter 1 & 2 – Flashcards

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