Ag Eco Exam 5 - Assignment Essays

Q: why is the supply elasticity of live beef inelastic in the short-run?

beef will always adjust slower, this is because its harder to make fast adjustments to them

Q: Define implicit costs

a cost for which there is no cash outlay at the time a resource is being used, or for which no cash outlay is required.

Q: define explicit costs

an expenditure made for the use of a resource

question

The minimum price at which a producer will offer a product for sale is equal to the minimum of his __________________

answer

average total cost

question

the measures of firm cost, AFC, AVC, ATC, and MC are each computed by dividing by ______________ in the denominator

answer

output

question

T or F: the profit maximizing amount of output to produce is that amount where the cost of the last unit produced is equal to its market value

answer

true

question

T or F: when APP is increasing, MPP must be below APP, and "pushing up" the average

answer

false

question

the time period which is adequate for the firm to be able to vary all quantities of resources in use is:

answer

the long-run

question

T or F: the supply curve shows the amounts of a good the producer is willing to offer for sale at alternative prices

answer

true

question

T or F: if Py=MR=ATC=MC, the firm's economic profit=0

answer

true

question

define opportunity cost

answer

the value of alternative opportunities foregone or sacrificed

question

name two factors that can result in a change (shift) in the market supply curve for a agricultural commodity

answer

growing conditions, improvements in technology

question

T or F: in the short-run, total fixed cost is constant for all levels of output

answer

true

question

T or F: the behavior of the competitive firm's MC curve is determined by the marginal physical product (MPP) curve derived from the production function

answer

true

question

a competitive firm's short-run supply decision should be to stop production if:

answer

price < AVC

question

T or F: in the short-run, firms must be able to pay variable cost to stay in business

answer

true

question

T or F: when a commodity price is above the market clearing equilibrium price, a surplus occurs, and the market is referred to as a "buyers" market

answer

true

question

total revenue (TR)=

answer

output X Py

question

the material in chapter 6 would be considered microeconomics or macroeconomics?

answer

microeconomics

question

why is the supply elasticity of live beef inelastic in the short-run?

answer

beef will always adjust slower, this is because its harder to make fast adjustments to them

question

Define implicit costs

answer

a cost for which there is no cash outlay at the time a resource is being used, or for which no cash outlay is required.

question

define explicit costs

answer

an expenditure made for the use of a resource

question

T or F: the market price of a good must be above minimum ATC if the firm is to earn an economic profit

answer

true

question

T or F: the equilibrium price will increase when the demand curve shifts to the right and the supply curve is stable

answer

true

question

T or F: average fixed cost will always decrease as the firm's output is increased, ceteris paribus

answer

true

question

How are equilibrium prices determined in the market place?

answer

when the market demand curve intersects with the market supply curve

question

prices are signals. what information do these signals carry?

answer

it tells a producer how much to produce and sell his product for

question

the two basic types of information required to develop analysis for determining economic optimum is ________ data and ___________ data

answer

price, output

question

why is it important for a producer to compute his costs of production on a per unit basis?

answer

so that he can compare how much he is putting into making the product compared to what he can receive per unit

question

if quantity supplied changes by 5 percent in response to a 10 percent change in the price of the good, the measured supply elasticity is equal to:

answer

0.5

question

what did dr. thompson say was the overall lesson in chapter 6 about cost concepts?

answer

prices are signals

question

what are the components of annual fixed costs referred to as the "DIRTI-5"

answer

depreciation, insurance, repairs, taxes, interest

question

as production output increases in the short-run, total fixed cost will __________________

answer

stay constant

question

T or F: Marginal cost, by definition, is the additional cost incurred in using another unit of input

answer

false

question

T or F: The shapes of a competitive firm's cost curves are determined by that firm's production function

answer

true

question

T or F: A firm's supply curve lies within the area we have called stage II of the production function

answer

true

question

T or F: The problem of scarcity could be solved if the government would fix the price of any scarce good high enough above its market equilibrium price that a surplus of that good would be produced

answer

false

question

T or F: where diesel fuel is an input in producing corn, a change in the price of diesel fuel will not cause a change in the quantity of corn produced

answer

false

question

T or F: the competitive firms AVC curve is the reciprocal of its APP curve and will rise as APP falls

answer

true

question

T or F: In determining equilibrium prices, demand is more important than supply

answer

false

question

T or F: the supply curve for peanuts slopes downward to the right because large farms can increase their output so much easier than small farms can

answer

false

question

T or F: If the ATC at a given output is $10, and AFC at that output is $4, AVC must therefore be $6

answer

true

question

T or F: In the case where MR - Py - ATC = MC, economic profit must be zero

answer

true

question

T or F: A competitive firm's MC curve is the reciprocal of that firm's MPP curve and must rise when MPP falls

answer

true

question

T or F: Fixed cost, by definition, is the cost of producing one more unit of output

answer

false

question

T or F: Total variable cost must always increase as the firm's output is increased, ceteris paribus

answer

true

question

T or F: A simultaneous increase in demand and a decrease in supply will cause the equilibrium price of a good to rise

answer

true

question

T or F: The increase in MC that accompanies increased output occurs because of diminishing marginal productivity of the firm's variable resources

answer

true

question

for an owner-operated firm, its total cost of production for any given output is.....

answer

equal to its explicit costs plus implicit costs

question

If producers increase the quantity supplied in response to an increase in the price of their product, they will experience.....

answer

an increase in total revenue

question

A firm may choose to produce at a loss in the short run, and wisely so, if it is at least....

answer

covering its variable costs

question

Which of the following refers to the cost curve which remains at a constant level regardless of the amount of output produced?

answer

total fixed cost

question

Equilibrium price is...

answer

none of the above

question

If quantity supplied changes by 10 percent when price changes by 20 percent, the price elasticity of supply is....

answer

0.5 (change in quantity/change in price)

question

For a market economy in which the individual producer is unable to influence price, the price that exists is.....

answer

determined by the interaction of the forces of supply and demand

question

The competitive firm's short run supply curve is also its....

answer

MC curve above minimum AVC

question

An increase in the supply of an item, demand remaining unchanged, will result in.....

answer

none of the above

1 of 54

question

The minimum price at which a producer will offer a product for sale is equal to the minimum of his __________________

answer

average total cost

question

the measures of firm cost, AFC, AVC, ATC, and MC are each computed by dividing by ______________ in the denominator

answer

output

question

T or F: the profit maximizing amount of output to produce is that amount where the cost of the last unit produced is equal to its market value

answer

true

question

T or F: when APP is increasing, MPP must be below APP, and "pushing up" the average

answer

false

question

the time period which is adequate for the firm to be able to vary all quantities of resources in use is:

answer

the long-run

question

T or F: the supply curve shows the amounts of a good the producer is willing to offer for sale at alternative prices

answer

true

question

T or F: if Py=MR=ATC=MC, the firm's economic profit=0

answer

true

question

define opportunity cost

answer

the value of alternative opportunities foregone or sacrificed

question

name two factors that can result in a change (shift) in the market supply curve for a agricultural commodity

answer

growing conditions, improvements in technology

question

T or F: in the short-run, total fixed cost is constant for all levels of output

answer

true

question

T or F: the behavior of the competitive firm's MC curve is determined by the marginal physical product (MPP) curve derived from the production function

answer

true

question

a competitive firm's short-run supply decision should be to stop production if:

answer

price < AVC

question

T or F: in the short-run, firms must be able to pay variable cost to stay in business

answer

true

question

T or F: when a commodity price is above the market clearing equilibrium price, a surplus occurs, and the market is referred to as a "buyers" market

answer

true

question

total revenue (TR)=

answer

output X Py

question

the material in chapter 6 would be considered microeconomics or macroeconomics?

answer

microeconomics

question

why is the supply elasticity of live beef inelastic in the short-run?

answer

beef will always adjust slower, this is because its harder to make fast adjustments to them

question

Define implicit costs

answer

a cost for which there is no cash outlay at the time a resource is being used, or for which no cash outlay is required.

question

define explicit costs

answer

an expenditure made for the use of a resource

question

T or F: the market price of a good must be above minimum ATC if the firm is to earn an economic profit

answer

true

question

T or F: the equilibrium price will increase when the demand curve shifts to the right and the supply curve is stable

answer

true

question

T or F: average fixed cost will always decrease as the firm's output is increased, ceteris paribus

answer

true

question

How are equilibrium prices determined in the market place?

answer

when the market demand curve intersects with the market supply curve

question

prices are signals. what information do these signals carry?

answer

it tells a producer how much to produce and sell his product for

question

the two basic types of information required to develop analysis for determining economic optimum is ________ data and ___________ data

answer

price, output

question

why is it important for a producer to compute his costs of production on a per unit basis?

answer

so that he can compare how much he is putting into making the product compared to what he can receive per unit

question

if quantity supplied changes by 5 percent in response to a 10 percent change in the price of the good, the measured supply elasticity is equal to:

answer

0.5

question

what did dr. thompson say was the overall lesson in chapter 6 about cost concepts?

answer

prices are signals

question

what are the components of annual fixed costs referred to as the "DIRTI-5"

answer

depreciation, insurance, repairs, taxes, interest

question

as production output increases in the short-run, total fixed cost will __________________

answer

stay constant

question

T or F: Marginal cost, by definition, is the additional cost incurred in using another unit of input

answer

false

question

T or F: The shapes of a competitive firm's cost curves are determined by that firm's production function

answer

true

question

T or F: A firm's supply curve lies within the area we have called stage II of the production function

answer

true

question

T or F: The problem of scarcity could be solved if the government would fix the price of any scarce good high enough above its market equilibrium price that a surplus of that good would be produced

answer

false

question

T or F: where diesel fuel is an input in producing corn, a change in the price of diesel fuel will not cause a change in the quantity of corn produced

answer

false

question

T or F: the competitive firms AVC curve is the reciprocal of its APP curve and will rise as APP falls

answer

true

question

T or F: In determining equilibrium prices, demand is more important than supply

answer

false

question

T or F: the supply curve for peanuts slopes downward to the right because large farms can increase their output so much easier than small farms can

answer

false

question

T or F: If the ATC at a given output is $10, and AFC at that output is $4, AVC must therefore be $6

answer

true

question

T or F: In the case where MR - Py - ATC = MC, economic profit must be zero

answer

true

question

T or F: A competitive firm's MC curve is the reciprocal of that firm's MPP curve and must rise when MPP falls

answer

true

question

T or F: Fixed cost, by definition, is the cost of producing one more unit of output

answer

false

question

T or F: Total variable cost must always increase as the firm's output is increased, ceteris paribus

answer

true

question

T or F: A simultaneous increase in demand and a decrease in supply will cause the equilibrium price of a good to rise

answer

true

question

T or F: The increase in MC that accompanies increased output occurs because of diminishing marginal productivity of the firm's variable resources

answer

true

question

for an owner-operated firm, its total cost of production for any given output is.....

answer

equal to its explicit costs plus implicit costs

question

If producers increase the quantity supplied in response to an increase in the price of their product, they will experience.....

answer

an increase in total revenue

question

A firm may choose to produce at a loss in the short run, and wisely so, if it is at least....

answer

covering its variable costs

question

Which of the following refers to the cost curve which remains at a constant level regardless of the amount of output produced?

answer

total fixed cost

question

Equilibrium price is...

answer

none of the above

question

If quantity supplied changes by 10 percent when price changes by 20 percent, the price elasticity of supply is....

answer

0.5 (change in quantity/change in price)

question

For a market economy in which the individual producer is unable to influence price, the price that exists is.....

answer

determined by the interaction of the forces of supply and demand

question

The competitive firm's short run supply curve is also its....

answer

MC curve above minimum AVC

question

An increase in the supply of an item, demand remaining unchanged, will result in.....

answer

none of the above

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