Transcript 2008D-2013D-MC-Non-Math - Mid

Farm Management
2008-2013 MC Non-Math
2008
7.
The own-price elasticity of supply estimates the impact on the quantity of
a good supplied by a change in the price of the good. Normally, one would
expect the own-price elasticity of supply to be
A.
B.
C.
D.
positive.
negative.
zero.
None of the above
• positive.
8.
The term "exchange rate" refers to
A. how much of one currency is needed to acquire a unit of another
currency.
B. how much principal is reduced by payments on an amortized loan.
C. the ratio between current and long-term debt.
D. the difference in value between a dollar today and a dollar one year from
today.
E. None of the above
• how much of one currency is needed to
acquire a unit of another currency.
9.
A procedure for expressing future cash flows in today's
A.
B.
C.
D.
E.
compounding.
discounting.
deflating.
inflating.
None of the above
• discounting.
dollars is called
12.
For an amortized loan, the present value of the loan
at the loan's interest rate is equal to
A.
B.
C.
D.
E.
payments discounted
the amount of money borrowed.
the number of payments times the payment amount.
total interest paid over the life of the loan.
the size of the annual payment.
None of the above
• the amount of money borrowed.
17.
A hectare equals
A.
B.
C.
D.
E.
0.40 acres
1.74 acres
2.47 acres
5.05 acres
None of the above
• 2.47 acres
22.
A farmer is "liquid" if
A.
B.
C.
D.
E.
he has sufficient current assets to cover current debts.
he has sufficient equity to cover current debts.
he has sufficient assets to cover all debts.
he can pay all debts with all equity.
All of the above
• he has sufficient current assets to cover
current debts.
25.
When a farmer borrows money to purchase land, he usually must offer the
title to the property as security until the debt has been repaid. This credit
instrument is commonly referred to as a
A.
B.
C.
D.
E.
sales contract.
promissory note.
mortgage.
check.
None of the above
• mortgage.
26.
A decline in the value of total farm assets will
A.
B.
C.
D.
E.
increase the rate of return to equity.
increase the rate of return to assets.
increase the capital turnover ratio.
all of the above.
None of the above
• . all of the above.
27.
The increase in wheat yield becomes smaller for each additional 10 pounds
of nitrogen fertilizer applied after 30 pounds per acre have been applied.
This is an example of
A.
B.
C.
D.
E.
increasing marginal returns.
unprofitable use of fertilizer.
diminishing marginal physical product.
stage 3 of production.
None of the above
• . diminishing marginal physical product.
28.
Which of the following causes a shift in the demand for beef?
A.
B.
C.
D.
E.
A decrease in cattle numbers
Increased cost of producing beef
Increased number of cattle producers
Increased income of consumers
All of the above
• . Increased income of consumers
29.
The cost of producing one additional unit of output is called
A.
B.
C.
D.
E.
opportunity cost.
substitution cost.
average cost.
marginal cost.
None of the above
• . marginal cost.
31.
Purchase of a Call option on corn means the buyer
A. is required to sell a corn futures contract at a set price.
B. may sell, but is not required to sell, a corn futures contract at a set price.
C. may buy, but is not required to buy, a corn futures contract at a set price.
D. is required to buy a corn futures contract at a set price.
E. None of the above
• . may buy, but is not required to buy, a corn
futures contract at a set price.
32.
If the price of a September Put option is higher today than yesterday, then
one would expect that the price of a September futures contract is
A. higher today than yesterday.
B. lower today than yesterday.
C. unchanged from yesterday.
D. either up or down. There is no relationship between futures prices
and prices of options.
E. None of the above
• . lower today than yesterday.
35.
A firm should shut down in the short-run if it cannot
A.
B.
C.
D.
E.
fixed costs.
total costs.
variable costs.
time costs.
overhead costs
• . variable costs.
cover its
36.
The price of widgets changes from $60 to $50 and, as a result, the quantity demanded
increases from 90 to 100 units. From this we can conclude that
A.
B.
C.
D.
E.
the demand for widgets is elastic.
the demand for widgets is inelastic.
the demand for widgets is of unit elasticity.
the demand for widgets has declined.
None of the above
• . the demand for widgets is inelastic.
38.
If the total cost of producing 100 units of output is $500 and the average
variable cost is equal to $1, then which of the following statements is true?
A.
B.
C.
D.
E.
Total variable cost of the 100 units is $400.
Total fixed cost is equal to $100.
Average fixed cost is equal to $4.
Average total cost is equal to $4.
None of the above is true.
• . Average fixed cost is equal to $4.
40.
How many bushels of corn are in a metric ton?
A.
B.
C.
D.
E.
33.3
35.7
36.7
39.4
None of the above
• . 39.4
2009
11. Marginal revenue and marginal cost are useful concepts in determining the profit
maximizing output level. Profit will be at its maximum level
A. where marginal revenue is at its maximum level and marginal cost is 0.
B. where marginal revenue is 0 and marginal cost is at its maximum.
C. where marginal revenue equals marginal cost.
D. where marginal revenue is at its minimum and marginal cost is at its maximum.
• . where marginal revenue equals marginal
cost.
12. If both demand and supply increased equally for an agricultural product, what
will be the results on the quantity of the product sold and the price received?
A. The same quantity will be sold at the same price.
B. An increased quantity will be sold at a lower price.
C. An increased quantity will be sold at a higher price.
D. An increased quantity will be sold at the same price.
E. None of the above
• . An increased quantity will be sold at the
same price.
17. The demand curve shows the relationship between
A. consumer tastes and the quantity demanded.
B. price and the quantity demanded.
C. price and production costs.
D. money income and quantity demanded.
E. None of the above
• . price and the quantity demanded.
20. Farmer Brown purchases a new tractor. A record keeping system which records
both the addition to equipment and the reduction of cash is called
A. income statement.
B. dual effect.
C. balance sheet.
D. double entry.
E. None of the above
• . double entry.
22. Farmer Johnson has a rate of return on assets of 5% when assets are valued
using the cost method, and a rate of return on assets of 7% when the assets are
valued using market valuation. This means that the value of assets using the cost
method
A. is greater than the market valuation.
B. is equal to the market valuation.
C. is less than the market valuation.
D. produces a higher return to farm assets.
E. None of the above
• . is greater than the market valuation.
26. Economists use elasticities to relate the percentage change in one variable to the
percentage change in another variable. The cross-price elasticity of demand
estimates the impact on the demand for a good with respect to the change in the
price of another good. A positive cross- price elasticity indicates the two goods are
A. substitutes.
B. complements.
C. inferior.
D. luxuries.
E. None of the above
• . substitutes.
27. The own-price elasticity of demand estimates the impact on the quantity of a
good demanded by a change in the price of the good. Normally, one would expect
the own-price elasticity of demand to be
A. positive.
B. negative.
C. zero.
D. None of the above
• . negative.
28. The income elasticity of demand estimates the impact of a change in income on
the demand for a good. For normal goods, the income elasticity of demand is
A. positive.
B. negative.
C. zero.
D. None of the above
• . positive.
33. The capital gains taxes that would be due should a farmer sell his land
example of a
A. current liability.
B. long-term liability.
C. deductible expense.
D. contingent liability.
E. None of the above
• . contingent liability.
is an
37. A vicious cold spell in the late spring has wiped out the buds on the peach trees grown in
Georgia, a major peach producing state. How will this freeze impact the price received for
peaches by Maryland peach producers?
A. No effect -- Georgia is too far away to have any impact on Maryland.
B. Will lower the price because the demand for peaches will be lower.
C. Because of the reduced supply, prices for peaches in Maryland will tend to move upward.
D. No effect -- Maryland does not grow enough peaches to have any impact on prices.
E. None of the above
• . Because of the reduced supply, prices for
peaches in Maryland will tend to move
upward.
39. A written agreement by which an owner of property transfers title to someone
for the benefit of beneficiaries is a
A. trust.
B. partnership.
C. corporation.
D. sole proprietorship.
E. None of the above
• . trust.
2010
•7. The Kansas City Board of Trade wheat futures
contract is for
A. hard red winter wheat.
B. hard red spring wheat.
C. soft ed winter wheat.
D. durum wheat.
E. None of the above
• . hard red winter wheat.
•8. If the total cost of producing 100 units of output is $400 and the
average variable cost per unit is $3, then which of the following
statements is true?
A. Total variable cost of the 100 units is $400.
B. Total fixed cost is equal to $100.
C. Average fixed cost is $3.
D. Average total cost is $3.
E. None of the above
• . Total fixed cost is equal to $100.
•9. Farmer Jones has less current assets than current liabilities. Her
current ratio is
A. negative.
B. zero.
C. between 0 and 1.
D. greater than 1.
E. None of the above
• . between 0 and 1.
•10. Economists use elasticities to relate the percentage change in one
variable to the percentage change in another variable. The cross-price
elasticity of demand estimates the impact on the demand for a good with
respect to the change in the price of another good. A negative crossprice elasticity indicates the two goods are
A. substitutes.
B. complements.
C. inferior.
D. luxuries.
E. None of the above
• complements.
•12. The income elasticity of demand estimates the impact of a change in
income on the demand for a good. For normal goods, the income elasticity
of demand is
A. positive.
B. negative.
C. zero.
D. None of the above
• positive.
•16. A cord is a stack of wood measuring
A. 2' x 4' x 4'
B. 4' x 4' x 4'
C. 4' x 4' x 8'
D. 4' x 8' x 8'
E. None of the above
• . 4' x 4' x 8'
•20. Which of the following is a market function?
A. storing
B. transporting
C. grading
D. processing
E. All of the above
• All of the above
•21. Farmer Johnson has a rate of return on assets of 4% when assets are
valued using the cost method, and a rate of return on assets of 5% when
the assets are valued using market valuation. This means that the value
of assets using the cost method
A. is greater than the market valuation.
B. is equal to the market valuation.
C. is less than the market valuation.
D. produces a higher return to farm assets.
E. None of the above
• . is greater than the market valuation.
•32. You can claim a tax deduction for a charitable contribution of $________
or more only if you have a written acknowledgment from the charitable
organization.
A. $100
B. $250
C. $1,000
D. $5,000
E. None of the above
• $250
•33. The business profit for a year would be found on
A. The balance sheet.
B. The cash flow budget.
C. The income statement.
D. A partial budget.
E. All of the above.
• . The income statement.
•35. A metric ton weighs
A. 1876.3 pounds.
B. 2000.0 pounds.
C. 2204.6 pounds.
D. 2520.3 pounds.
E. None of the above
• . 2204.6 pounds.
•37. The CME live cattle futures contract is for ______ pounds of fed cattle.
A. 10,000
B. 40,000
C. 50,000
D. 100,000
E. None of the above
• 40,000
•38. In legal terminology, an agent has one's
A. right of ownership of property.
B. authority to transact business.
C. complete control and liability.
D. no financial responsibility.
E. None of the above
• authority to transact business.
2011
•3. A township is six miles square and includes
A. 6 sections.
B. 36 sections.
C. 40 sections.
D. 160 sections.
E. None of the above
• 36 sections.
• 4. The main difference between a joint tenancy and tenancy in common is
A. the surviving joint tenant will eventually own all of the land as
a result of right of survivorship.
B. the surviving tenant in common will eventually own all the land
as a result of right of survivorship.
C. only husbands and wives may be joint tenants.
D. tenants in common must own equal shares of the property while
joint tenants may own unequal shares (i.e., H owns 1/4 and W owns 3/4).
E. None of the above
• .
the surviving joint tenant will eventually own all of the land as a result
of right of survivorship.
•5. Cooperatives pay patronage refunds according to
A. one man, one vote.
B. size of farm.
C. amount of business done by patron.
D. total assets.
E. All of the above
• amount of business done by patron.
•10. Due to a sharp increase in hog numbers, average hog prices were much lower in
2008 than in 2007. Demand for corn to feed to hogs _____________ in 2008
compared to 2007.
A. increased
B. decreased
C. did not change
• . increased
•16. A charge for capital used in a farmer's cattle herd is usually included in an enterprise
budget regardless of whether he borrowed money to buy the cows or not. This illustrates
the principle of
A. marginal cost.
B. fixed cost.
C. opportunity cost.
D. variable cost.
E. alternative cost.
• opportunity cost.
•21. For tax year 2010, the social security wage base was
A. $102,000
B. $106,800
C. $108,600
D. $110,100
E. None of the above
• . $106,800
•22. For an individual under age 50, the maximum allowable IRA contribution and
deduction in 2010 was
A. $1,000
B. $2,000
C. $3,000
D. $5,000
E. None of the above
• $5,000
•23. The present value formula for estimating land prices (PV = annual net returns ÷
discount rate) assumes
A. future prices and yields can be estimated accurately.
B. the discount rate is appropriate.
C. income will continue to infinity.
D. net income will not trend up or down.
E. All of the above
• All of the above
•24. The type of life insurance which provides protection for a limited time and is
usually cheaper per dollar of protection is called
A. whole life.
B. term.
C. endowment.
D. new life.
E. universal life.
• . term.
•26. The turnover ratio is calculated by dividing __________ by average total assets.
A. total sales
B. beginning inventory
C. value of farm production
D. net farm income
E. None of the above
• value of farm production
•29. Increasing leverage during a period when a farm's percent return to total capital
is less than the interest rate will mean
A. higher returns to equity.
B. lower returns to equity.
C. lower risk.
D. lower gross income.
E. None of the above
• lower returns to equity.
•30. A constant payment loan with payments consisting of principal and interest is
called
A. an amortized loan.
B. a complementary loan.
C. a discounted loan.
D. a fixed rate loan.
E. a capital loan.
• an amortized loan.
•32. If the price of a commodity increases by 5% and the quantity purchased
decreases by 10%, then the demand for this commodity is
A. upward sloping.
B. inelastic.
C. elastic.
D. unitary.
E. unstable.
• . elastic.
•33. Changes in price within a year which tend to follow the same pattern over time
are called
A. price cycle.
B. price seasonality.
C. price volatility.
D. price discrimination.
E. None of the above
• . price seasonality.
•34. A marketing function which tends to regulate the supply of a product and
provide a stable
market price is
A. transporting.
B. processing.
C. grading.
D. storing.
E. None of the above
• storing.
•35. Which one of the following would cause an increase in the price of an
agricultural commodity?
A. An increase in supply and a decrease in demand
B. A decrease in supply with no change in demand
C. A decrease in demand with no change in supply
D. All of the above would cause price to increase
E. None of the above
• A decrease in supply with no change in
demand
•36. If the price of a commodity is too high, the supply will be greater than the
demand resulting in a
A. surplus.
B. boycott.
C. monopoly.
D. shortage.
E. None of the above
• . surplus.
•37. A trader with a short position in the futures market
A. profits when prices go down; loses when prices go up.
B. profits when prices go neither up nor down.
C. profits when prices go up; loses when prices go down.
D. cannot lose money.
E. None of the above
• . profits when prices go down; loses when
prices go up.
•38. The main reason for hedging is
A. to make more profit.
B. to insure against a production loss.
C. to reduce the price risk associated with producing or storing a cash commodity.
D. to take an opposite position from the speculator.
E. None of the above
• . to reduce the price risk associated with
producing or storing a cash commodity.
•39. A farmer who buys feeder pigs could use the options market to reduce his price
risk by
A. buying a hog Put option.
B. selling a hog Put option.
C. buying a hog Call option.
D. selling a hog Call option.
E. All of the above
• buying a hog Put option.
•40. If a farmer purchased land for $160,000, has a loan of $100,000 remaining on the
land, and the market value of the land is $200,000, the book value of the land on the
balance sheet will be
A. $40,000.
B. $60,000.
C. $100,000.
D. $160,000 less any accumulated depreciation.
E. None of the above
• . $160,000 less any accumulated
depreciation.
2012
A acre equals
A. 0.40 hectares
B. 0.74 hectares
C. 2.47 hectares
D. 5.05 hectares
E. None of the above
• 0.40 hectares
A farmer who wants a real rate of return on his investment of 5% will use what
discount rate if he anticipates inflation of 3% per year?
A. 2%
B. 3%
C. 5%
D. 8%
E. None of the above
• 8%
An decrease in the rate of inflation, everything else equal, will have what impact on
the present value of a future stream of income?
A. No impact
B. Increase the present value
C. Decrease the present value
D. Cannot tell
E. None of the above
• Increase the present value
The process of finding the present value of a dollar to be received in the future is
known as
A. compounding.
B. discounting.
C. forwarding.
D. ratio analysis.
E. None of the above
• discounting.
A farmer placed too high a value on his land in his closing inventory while all other
records were accurate. Net working capital in his record summary is
A. too high.
B. too low.
C. not affected.
D. fixed.
E. None of the above
• not affected.
When the size of the soybean harvest exceeds locally available farm and elevator
storage, what happens to the basis?
A. Basis narrows.
B. Basis widens.
C. Basis goes out of existence.
D. Basis is usually the same all year long.
E. None of the above
• Basis widens.
The short-run supply curve for a firm is identical to
A. average variable cost.
B. average fixed cost.
C. average total cost.
D. marginal cost.
E. None of the above
• . marginal cost.
A farm business with declining average total costs has
A. increasing returns to size.
B. decreasing returns to size.
C. constant returns to size.
D. decreasing demand.
E. None of the above
• increasing returns to size.
Other things equal, the value of land will be greatest to the farmer who has the
A. longest planning horizon.
B. shortest planning horizon.
C. highest discount rate.
D. lowest discount rate.
E. None of the above
• lowest discount rate
For the rules of depreciation, which of the following is an example of "listed
property"?
A. A home
B. A raised cow
C. A greenhouse
D. A passenger car
E. None of the above
• A passenger car
An LLC (Limited Liability Company) is usually
A. taxed like a corporation.
B. taxed like a partnership.
C. not for profit and therefore not taxed.
D. illegal in Missouri.
E. None of the above
• . taxed like a partnership
The USDA agency that administers the federal crop insurance program is the
A. Farm Service Agency
B. Risk Management Agency
C. Farm Crop Insurance Agency
D. Rural Development Agency
E. None of the above
• Risk Management Agency
Which is not a policy plan for multi-peril crop insurance?
A. Revenue Protection
B. Yield Protection
C. Management Protection
D. Revenue Protection with harvest price exclusion
E. None of the above
• Management Protection
On a crop insurance policy, APH stands for
A. Adjusted Protection History
B. Accumulated Price History
C. Approximate Policy Hierarchy
D. Actual Production History
E. None of the above
• . Actual Production History
What type of insurance protects the farmer from lawsuits if he/she is responsible for
personal injury or property damage to another person?
A. Life insurance
B. Property insurance
C. Accident insurance
D. Liability insurance
E. None of the above
• . Liability insurance
Even though corn prices are at record levels, corn farmers still receive from USDA
A. direct payments.
B. loan deficiency payments.
C. counter-cyclical payments.
D. acreage protection payments.
E. None of the above
• direct payments.
Which of the following should not affect a farmer’s decision to store his crop?
A. Interest rates
B. Shrinkage during storage
C. Anticipated price in the future
D. What he paid for his grain bin
E. None of the above
• What he paid for his grain bin
The returns for a farmer who produces his crop under a contract as compared to a
farmer who produces none of his crop under contract would be
A. more variable.
B. less variable.
C. always higher.
D. always lower.
E. None of the above
• . less variable.
For an amortized loan, the amount of interest in the first payment will be
A. more than the amount of the principal.
B. less than the amount of the principal.
C. equal to the amount of the principal.
D. dependent on the length of the loan.
E. None of the above
• None of the above
Crop prices increase, causing Marcia’s sales income to increase while leaving her cash
operating expenses unchanged. This will cause her capital turnover to
A. increase.
B. decrease.
C. not change.
D. Any of the above
E. None of the above
• increase.
2013
How many square feet are in an acre?
A. 5,280
B. 12,250
C. 43,560
D. 100,000
E. None of the above
• . 43,560
The term "exchange rate" refers to
A. how much of one currency is needed to acquire a unit of another currency.
B. how much principal is reduced by payments on an amortized loan.
C. the ratio between current and long-term debt.
D. the difference in value between a dollar today and a dollar one year from today.
E. None of the above
• how much of one currency is needed to
acquire a unit of another currency.
Farmer Brown has a debt-to-asset ratio of 53%. His debt-to-equity ratio must be
A. negative.
B. 47%.
C. Less than 110%.
D. Greater than 110%.
E. None of the above
• Greater than 110%.
Farmer Johnson has a rate of return on assets of 5% when assets are valued using the
cost
method, and a rate of return on assets of 4% when the assets are valued using market
valuation. This means that the value of assets using the cost method
A. is greater than the market valuation.
B. is equal to the market valuation.
C. is less than the market valuation.
D. has not been adjusted for depreciation.
E. None of the above
• is less than the market valuation.