Agricultural Economics Test 1 – Flashcards
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Food Industry
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All firms, large and small, engaged in the production, processing, and/or distribution of food, fiber, and other agricultural products.
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Farm Service Sector
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Those firms that produce and distribute the goods and services that farmers (producers) buy as a part of their business activities.
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Producers Sector
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Those firms engaged in the production of raw food, fiber, and other agricultural products.
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Processors Sector
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Those firms that convert raw agricultural products into food products in the form that the consumer eventually buys.
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Commodities Processors
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Buy raw agricultural products that have not been processed and convert them into food ingredients. A flour miller who buys wheat and sells flour is an example.
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Food Product Processors
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Buy food ingredients and process them into the form where they are ready for sale to the consumer. For example, Hunt's buys tomatoes and vinegar and makes them into ketchup.
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Food Service Distributors
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Those firms that distribute food products from food product processors to away from home dining facilities.
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Marketers Sector
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The set of firms that distributes food products from processors to the final consumer when and where the consumer when and where the consumer wants it. That consumer may be a retail shopper or someone eating at an away from home dining facility
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Farm Structure
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The study and analysis of farm characteristics such as the physical and economic size of farms, ownership of farms, and characteristics of the farm manager and his or her family.
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Farm
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Defined by the U.S. Department of Agriculture as an establishment that has (or should have had) at least $1,000 of sales of agricultural products during the year.
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Typology
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A system developed by the USDA that classifies farms based on economic size and characteristics of the farm operator.
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Concentration
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The dominance of an industry by a few firms, usually measured by the percentage of the total market owned by the largest four (or any other number) firms.
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Market Power
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The ability of a firm or group of firms to control price and/ or quantity traded in a market because of the dominance of the firm(s) in the market.
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Globalization
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The expansion of firms across national boundaries.
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Coordination
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The communication system that conveys consumer wants to producers. Traditionally, prices were the primary means of communication. More recently management information systems have replaced prices.
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Vertical Integration
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The combination of different stages of the production/marketing sequence under a single management.
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Biofuels
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Alternatives to petroleum-based fuels produced from biological or plant-based feedstocks.
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Ethanol
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A biofuel form of alcohol that can be mixed with gasoline for use in automobiles.
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Economics
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The social silence that deals with the allocation of scarce resources among an unlimited number of competing alternative uses.
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Agricultural Economics
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The social science that deals with the allocation of scarce resources among those competing alternative uses found in the production, processing, distribution, and consumption of food and fiber.
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Price System
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An allocative system in which economic choices are based on prices.
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Command System
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An allocative system in which economic choices are made by some central administrative unit.
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Efficient
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A general economic concept used in a variety of situations measuring output per unit of input. The higher the ratio, the more efficient the process.
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Microeconomics of Production
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The economics of the individual producer or firm making management decisions.
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Microeconomics of Consumption
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The economics of the individual consumer making decisions about the allocation of the family budget.
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Market
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An interaction between potential buyers and potential sellers.
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Price Taker
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Potential buyers and potential sellers in a perfectly competitive market who face a "take-it-or-leave-it" decision at the prevailing market price.
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Marketing
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The study of the creation of value that occurs as a good moves from producer to consumer.
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Agribusiness
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Firms engaged in farm service marketing, agricultural production, food processing, food distribution, and consumption.
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Macroeconomics
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The study of the entire economy including employment, inflation, international trade, and monetary issues.
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Economic Model
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A conceptualization, based on assumptions, of how economic activity occurs.
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Ceteris Paribus
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A shorthand way of saying "let one economic variable (the cause) change and see how another economic variable (the effect) changes, assuming that everything else remains unchanged."
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Opportunity Cost
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A measure of how much of an earning opportunity is foregone by using a resource in its current employment. Used by economists to establish an economic value for those resources that do not have an expressed market price.
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Diminishing Returns
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As additional units of an economic variable are used, the additional impact of that variable will eventually increase at a decreasing rate.
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Marginal
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An additional or an incremental unit of something.
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Correlation
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Changes in two variables are related to one another in a predictable manner but not necessarily in a cause-effect manner.
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Causation
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There is a cause-effect relation between two variables. A change in one variable causes a change in the second variable.
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Comparative Statics
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A before-after comparison to determine the impact of some action.
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Rate of Change
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The amount of change in one variable caused by or associated with a unit change in another variable.
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Slope
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At any point on a curve, slope is equal to the ratio of rise (vertical change) to run (horizontal change); and it is equal to the rate of change of the relationship at that point.
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Market
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An interaction between potential buyers and potential sellers.
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Perfect Competition
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A market in which there are so many buyers and so many sellers that no one of them can influence the market by his or her actions.
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Demand
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The quantities of a good that buyers are wiling to purchase at a series of alternative prices, in a given market, during a given period of time, ceteris paribus.
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Quantity Demanded
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How much of a good or service a buyer is willing to purchase at a single, specified price, in a given market, at a given time, ceteris paribus.
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Demand Schedule
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A schedule identifying specific price-quantity combinations that exist in a demand relationship.
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Supply
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The quantities of a good that sellers are willing to offer at a series of alternative prices, in a given market, during a given period of time, ceteris paribus.
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Quantity Supplied
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How much of a good or service a seller is willing to offer at a single, specified price, in a given market, at a given time, ceteris paribus.
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Supply Schedule
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A schedule identifying specific price-quantity combinations that exist in a supply relationship.
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Supply Curve
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A two-dimensional graph illustrating a supply relationship.
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Equilibrium Price
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The single price at which the quantity supplied in a market is equal to the quantity demanded.
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Demand/Supply Shift
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A change in the demand/supply relationship caused by a change in one of the ceteris paribus conditions.
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The economic term used to describe the earning forgone by attending college is
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opportunity cost
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Economics is the science of
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allocations
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If I eat less it won't hurt the economy, therefore if everyone eats less it won't hurt the economy. This statement is an example of
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the fallacy of composition
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The study of the behavior of an individual firm is part of
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microeconomics
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In order to establish a market, what is essential?
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Potential buyers and potential sellers
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When a local McDonald's manager hired a third counter worker her sales increased by 22%. When she hired a fourth counter worker, her sales increased by 12%. This is an example of
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Diminishing returns
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In the language of economics, marginal means
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additional
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what creates the need for an allocation system
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scarcity
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Which food industry sector is closest to the final food consumer
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the marketer sector
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According to the U.S. department of Agriculture, the number of farms in the U.S. is
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2.2 million
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In terms of number of farms, non-family, corporate farms are what proportion of total farms in the united states
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2%
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Concentration among processors is a concern because concentrated firms
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gain market power and can manipulate price
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The average American Farmer produces enough to feed approximately ___ people (both domestic and foreign)
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200 (150 domestic, 50 foreign)
