Name________________ Old Exam Review - Test 2 Chapters 5, 6 & 8 AGRI 2317 - Agri

Question

Name________________

Old Exam Review - Test 2

Chapters 5, 6 & 8

AGRI 2317 - Agricultural Economics

1.____ During stage 3 of production, marginal physical product is increasing

2.____ Maximizing profits is the one thing every business owner wants to achieve.

3.____ Most firms look at years past to determine pricing for commodities.

4.____If a firm is supplying more of a good than is demanded there is a market shortage.

5.____ In perfect competition producers are price takers.

6.____ Market equilibrium is found where all goods that are produced are cleared off of the market by the equal demand of consumers

7.____ If the change in total economic surplus is positive due to a shift in the demand and/or supply curve, society is better off.

8.____ Marginal Cost = Average Variable Cost, when Average Variable Cost is at its minimum

9.____ When APP is negative, this corresponds to Stage 3 of Production

10.____ Another term for the TPP curve is the production function

11.____ The Cobweb Theory is an example of how markets converge to equilibrium over time

12.____ Markets tend to move away from equilibrium

18.____ If the marginal physical product of labor is 500 products per hour and if Frito Lay can sell a snack food product for $1.00, what is the change in total revenue due to the hiring of one additional hour of labor?

a.       $1.00/hour

b.      $250/hour

c.       $500/hour

d.      Can

Explanation / Answer

1._true___ During stage 3 of production, marginal physical product is increasing 2.__yes__ Maximizing profits is the one thing every business owner wants to achieve. 3.__true__ Most firms look at years past to determine pricing for commodities. 4.__false__If a firm is supplying more of a good than is demanded there is a market shortage. 5._true___ In perfect competition producers are price takers. 6.___true_ Market equilibrium is found where all goods that are produced are cleared off of the market by the equal demand of consumers 7.__true__ If the change in total economic surplus is positive due to a shift in the demand and/or supply curve, society is better off. 8.__true__ Marginal Cost = Average Variable Cost, when Average Variable Cost is at its minimum 9.__true__ When APP is negative, this corresponds to Stage 3 of Production 10._true___ Another term for the TPP curve is the production function 11.___false_ The Cobweb Theory is an example of how markets converge to equilibrium over time 12.__true__ Markets tend to move away from equilibrium 18.____ If the marginal physical product of labor is 500 products per hour and if Frito Lay can sell a snack food product for $1.00, what is the change in total revenue due to the hiring of one additional hour of labor? c. $500/hour 27.____ If the variable input is Acreage of Land used for production, the Marginal Input Cost(MIC) refers to: c. The change in total revenue when using one additional acre of land Use the following table to answer questions 29-33 Labor Output TFC TVC TC MC 20 40 $150 $200 X ---------------- T 60 W Z Y $10 29.____What is the value of W? a. $50 30.____ What is the value of X? b. $200 31.____ What is the value of Y? d. $550 32.____ What is the value of Z? a. $200 33.____ What is the value of T? d. 60 36.____ If Marginal costs of production are increased. What will the likely consequences be on producers? a. Prices of their output will rise and quantities produced will fall 39.____ In regards to Perfectly Competitive Markets, which of the following statements is not true: b. Prices are set by the balance of demand and supply 41. _true_T/F__Cross price elasticity of demand is a measure of responsiveness of the quantity demanded of one good due to a change in the price of a different good, ceteris paribus 42. true__T/F__A normal good is a good for which consumption falls when income increases Use the following information to answer questions 43

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