AGEC 1003 Fannin Final Exam Review Questions

question

The firm's right to make a profit is given by

answer

Satisfying a consumer need

question

The marketing plan is a key part of the business plan. (T/F)

answer

True

question

Management is:

answer

Accomplishing tasks through people

question

The controlling function within management:

answer

involves measuring and monitoring progress.

question

Which of these is not a barrier to consumer satisfaction?

answer

Price separation

question

The first step in the decision making process is:

answer

identify the problem

question

To calculate your firm's market potential using the consumption approach, you need the total market size. (T/F)

answer

True

question

The Agribusiness system is composed of the input supply sector, the production sector, and the macroeconomic sector.(T/F)

answer

False

question

John Deere (a company that sells tractors to farmers) is a part of which sector in the agri-food system?

answer

the input supply sector

question

The Agribusiness Industry is unique because of:

answer

-Cultural, institutional, and political aspects of food.
-Uncertainty from underlying biological production processes
-Differing competitive structures existing within and among sub-sectors of the food and agribusiness sector

question

Analysis of the course of action is the most important step in decision-making.

answer

False

question

The functions of management include:

answer

Planning, Organizing, Controlling, and Directing

question

The goal of a manager:

answer

Is to maximize the long run profits of the firm by profitably satisfying the consumer demands

question

Being a good communicator and ability to effectively motivate people are:

answer

Skills required of a good agribusiness manager

question

Managers can achieve the three E's when their firm is the first choice of their

answer

Customers, Employees, and Investors

question

The fundamental principle of decision-making include:

answer

-Make the decision making easier
-Improve the quality of decisions
-Reduce the time necessary to make good decisions
-Improve the frequency of good decisions

question

The grades and Standards function is used to overcome value separation. (T/F)

answer

False

question

Attributes such as measurements of the number of competing firms and homogeneity of products refer to what dimension of the Structure-Conduct- Performance model?

answer

structure

question

The buying function overcomes which of the five barriers to consumer satisfaction

answer

Ownership Serparation

question

Time utility means that the product must be available where the consumer wants it. (T/F)

answer

False

question

Which of the following has not increased the efficiency of the marketing system?

answer

Monopolies

question

The structure conduct performance (SCP) model evaluates marketing systems on

answer

-How efficiently it meets consumer needs
-How effectively it generates profits
- How fairly it meets consumer needs

question

__________ involves examining revenue and expenses to determine if the company is meeting its objectives.

answer

Financial Analysis

question

The organizing function within management

answer

includes developing a structure for putting plans into action

question

The planning function within management:

answer

includes all activities that determine the future direction of the organization

question

The macroeconomic approach to measuring market potential focuses on

answer

Gross Domestic Product (GDP) of a region

question

Which does the marketing mix consist of?

answer

Price, Product, Promotion, and Place

question

In a SWOT Analysis, what dimensions are "external" to marketing strategy?

answer

Opportunities and Threats

question

Analyzing alternatives is an important step in the decision making process that managers face. Which of these is not part of the three-step process for analyzing alternatives?

answer

Listing of the alternatives

question

Economic states which include consumption, retailing, wholesaling, processing, assembly, and production describe:

answer

a marketing system

question

Place utility means that:

answer

the product must be available where the consumer wants it

question

Loss Leader pricing is focused on pricing at the "going rate"

answer

False

question

A great strategic plan without flawless execution is like having no plan at all

answer

True

question

Good budgeting tales the place of good management

answer

False

question

An extrapolation forecasting procedure is naive

answer

True

question

If own-price elasticity is unitary, the a price decrease will.

answer

Have no effect on total revenue

question

Assume that you are getting a raise, which increases disposable income by 7%. The income elasticity for a steak is 1.265. What impact would this raise have upon the demand for steak?

answer

Demand would increase by 8.85%

question

In the question above, what type of good is steak?

answer

normal, luxury

question

Graphical analysis is important in forecasting because

answer

it provides a visual shift representation of the data

question

Futures markets provide the agri-food system with a way to

answer

reduce price risk

question

Forecasts of future levels of major economic variables such as GDP are important to agribusinesses because

answer

They are likely related to a firm's sales and costs

question

Which of these is not one of the five factors that influence forecast selection

answer

the objective of the firm

question

When you are measuring the quality of your forecasts, if your forecast error has a combination of both positive and negative values, you are better off using

answer

mean square error

question

Suppose that the own price elasticity for Andy Gator is -1.25. In order for Abita to increase total revenue, at least in the short run, it would be advisable to

answer

Lower the price of the Andy Gator

question

Which of these cannot cause a shift in demand

answer

Price of the own good

question

Which of these is likely to have the most elastic demand curve

answer

Sara Lee low sodium ham

question

The business vision statement, the strategic plan , the implementation of the strategic plan

answer

are the three parts of strategic management

question

Which one of these is not one of the five forces

answer

The threat of a new business leaving a firm's existing market

question

What a business is going to do better, faster, quicker, and cheaper than anyone else is a firm's

answer

sustainable competitive advantage

question

A firm's external environment includes what

answer

Market opportunities, market threats

question

Suppose that the own price elasticity of a Rotolo's calzone is -1.38. This suggests that if the price of a rotolo's calzone declines by 5%, the quantity of Rotolo's calzones demanded will

answer

increase by 6.9%

question

The timing of cash that is expected to flow in and out of the business during the budgeting period should be the same as the timing of the flows in the operating budget: (T/F)

answer

False

question

If you were surveying all Louisiana households about how much gumbo they consume in a single year, the data you would collect would most likely be an example of

answer

Cross-sectional data

question

The time permitted to develop a forecast represents a factor that influences forecasts.

answer

True

question

The movement from A to B on the graph below represents what concept of consumer demand

answer

a change in the quantity demanded

question

Refer to the table above and using a four-month simple average, forecast price for period July.

answer

4.85

question

Profitability (net Income) is measured from the

answer

operating budget

question

Which type of budget may best model the seasonality of a firm's revenue in a given year.

answer

Cash flow budget

question

Which type of budget explicitly breaks out the variable expenses from the fixed expenses?

answer

operating budget

question

Adjusting for population is not applied in forecasting

answer

False

question

Cyclical Patterns of prices and quantities are most often seen in

answer

Livestock

question

An extrapolation forecasting procedure is naive (T/F)

answer

True

question

Assume that a retailer sells 1000 6 packs of pepsi per day at $3/6 pack. You as an economic analyst, estimate that the cross-price elasticity between Pepsi and Coca Cola is 0.6. If the retailer raises the price of Coca cola by 5%, how would sales of pepsi be affected?

answer

Sales of Pepsi would fall by 30 units

question

What is the demad relationship between the product in the previous question?

answer

Substitutes

question

Developing an effective organizational structure is important because it

answer

Impacts financial and marketing performance

question

These employees have the ability to make decisions

answer

Line

question

Autonomous profit centers (business units) offer all of the following benefits except

answer

slow feedback on performance

question

Which type of legal structure is limited to 75 shareholders

answer

Sub chapter S corporations

question

Double taxation involves

answer

profits being taxed and then dividends received by shareholders being taxed

question

There is one single best legal structure for all firms

answer

False

question

The most complex legal structure is

answer

Corporation

question

General characteristics of a partnership include all but which of the following

answer

Multiple business records for each partner

question

Once a company sells more units of a product than are required to break even, the company will make a profit

answer

True

question

The contribution margin in break-even analysis is derived by subtracting

answer

variable cost per unit from output price

question

In the long run, a firm will produce even if price does not cover all costs so long contribution per unit is positive

answer

Flase

question

Detre Corp has acontribution margin percentage of 0.40. They are considering increasing their advertising expenditures by $25,000 to promote increased sales. How many additional dollars in sales must they have to cover the additional advertising costs (i.e. how much does break even sales go up)?

answer

$62,500

question

Returns increase at an increasing rate, increase at a decreasing rate, reach a maximum, and then declines the economic principle of

answer

Diminishing Marginal Returns

question

The profit-maximizing production area is between the minimum efficiency level of input use and the maximum efficiency level of input use.

answer

Flase

question

What group of individuals typically help a firm determine technical efficiency

answer

Production managers

question

In any production process the marginal product of an input equals:

answer

the change in total output divided by the change in the input

question

In what way does average fixed cost per unit change as output rises?

answer

It reduces average fixed cost per unit, because a given fixed cost can be spread across more units of output

question

Dr. Detre operates a tutoring business at LSU. He charges a price of $47 per hour (marginal revenue). The marginal cost of working the 36th hour each week is $42; the marginal cost of working the 37 hour is $44; 38 hour is $46 and 39 hour is $48. How many hours should he work each week?

answer

He should work 38 hours per week, because this is the workload that maximizes his net revenue (profit).

question

What is on the horizontal (x) axis when we draw the graphs for the total product, average product, and the marginal curves?

answer

Quantity of the input

question

Break-even analysis can be used to evaluate effectiveness of advertising. (T/F)

answer

True

question

The contribution per unit is made to

answer

-Profits
-Paying off fixed costs

question

If the price of the product is greater than the break-even price, the firm should quit producing. (T/F)

answer

False

question

By comparing marginal revenue and marginal cost, can managers determine the optimal level of output? (T/F)

answer

True

question

The principle of equi-marginal allocation always leads to production in the third stage. (T/F)

answer

False

question

Suppose you operate a sandwich shop and currently have two employees. If you hire a third employee, your output of sandwiches/day rises from 75-90. If you hire a fourth employee, output rises to 110 per day. A fifth and sixth would cause output to rise to 120 and 125/day.

answer

Decreasing marginal physical product would set in the hiring of the fifth worker

question

If average product is decreasing, the marginal product:

answer

must be less than average product

question

Economists assume that producers try to maximize

answer

profit

question

If 25 workers can pick 100 flats of strawberries per hour, then average product is

answer

4 flats per hour

question

From the following table, determine the marginal product of labor when the firm increases from three to four units of labor input

answer

question

In decentralized decision making, more decision making authority is given to

answer

lower level management

question

The matrix approach to organizing work is where employees are responsible to two or more bosses

answer

true

question

What are the four principles of organization design

answer

-Keep the organization structure simple
-give critical tasks prominence and allow them to function without restriction
-keep support staff to a minimum
-keep working units small

question

An effective business structure is important to accomplishing the business objectives of an agribusiness

answer

true

question

corporations

answer

have the greatest access to capital

question

What are the characteristics of a limited liability company

answer

-all members may enjoy limited liability
-all members participate freely in management
-individuals are taxed as partners

question

A sole proprietorship is an organizational structure where an individual owns, manages, assumes all the risk, and derives all the profit from a business

answer

true

question

Choosing a legal business structure falls within which function of management?

answer

organizing

question

What are the differences between S and C corporations?

answer

- Rate and method taxed by the federal government
-The number of shareholders
-Who is allowed to be a shareholder

question

What is included in a written partnership?

answer

-How much control each partner has in business decision
-How much control each partner has over real and personal property
-How are profits and losses distributed among the partners
-How does the partnership plan to keep records

question

What is the basic accounting equation?

answer

Total Assets= Total liabilities+ Owner's equity

question

Accounting documents are part of the controlling function of management.(T/F)

answer

True

question

The quick ratio will always be less than or equal to the current ratio.(T/F)

answer

True

question

Net working capital can be changed by

answer

selling a piece of equipment for cash

question

Liquidity ratios can be obtained from information on the balance sheet, while activity ratios require information obtained from the

answer

income statement and balance sheet

question

Methods of analyzing financial statements include

answer

-Comparative analysis
-Ratio Analysis

question

_________ focuses on the long-term decision-making regarding the acquisition of projects

answer

capital budgeting

question

If the cost benefit ratio is less than one, then the net present value must be

answer

question

The discount rate used by the firm for evaluating projects is called the:

answer

weighted average of cost capital

question

If the Net Present Values of two, mutually exclusive options are both greater than zero, which option should be selected of the firm uses the Net Present Value method?

answer

The one with the largest net present value

question

___________ indicates how much of a company's net worth and asset commitment is being financed with debt

answer

Solvency ratios

question

Accelerated cost recovery and investment taxed credits

answer

Encourage business investment

question

The return on invested capital ration will always be less than or equal to the return on owners equity ratio. (T/F)

answer

True

question

Compounding is

answer

-the opposite of discounting
-finding the value of something in the future

question

The payback method is flawed because

answer

it does not consider time value of money

question

The best way to analyze the decision of whether to buy, borrow, or lease assets is

answer

Net Present Value

question

A good proxy for the opportunity cost of capital for an investor is

answer

the market average return on investment for the industry he/she is investing in

1 of 120

question

The firm's right to make a profit is given by

answer

Satisfying a consumer need

question

The marketing plan is a key part of the business plan. (T/F)

answer

True

question

Management is:

answer

Accomplishing tasks through people

question

The controlling function within management:

answer

involves measuring and monitoring progress.

question

Which of these is not a barrier to consumer satisfaction?

answer

Price separation

question

The first step in the decision making process is:

answer

identify the problem

question

To calculate your firm's market potential using the consumption approach, you need the total market size. (T/F)

answer

True

question

The Agribusiness system is composed of the input supply sector, the production sector, and the macroeconomic sector.(T/F)

answer

False

question

John Deere (a company that sells tractors to farmers) is a part of which sector in the agri-food system?

answer

the input supply sector

question

The Agribusiness Industry is unique because of:

answer

question

Analysis of the course of action is the most important step in decision-making.

answer

False

question

The functions of management include:

answer

Planning, Organizing, Controlling, and Directing

question

The goal of a manager:

answer

Is to maximize the long run profits of the firm by profitably satisfying the consumer demands

question

Being a good communicator and ability to effectively motivate people are:

answer

Skills required of a good agribusiness manager

question

Managers can achieve the three E's when their firm is the first choice of their

answer

Customers, Employees, and Investors

question

The fundamental principle of decision-making include:

answer

-Make the decision making easier
-Improve the quality of decisions
-Reduce the time necessary to make good decisions
-Improve the frequency of good decisions

question

The grades and Standards function is used to overcome value separation. (T/F)

answer

False

question

Attributes such as measurements of the number of competing firms and homogeneity of products refer to what dimension of the Structure-Conduct- Performance model?

answer

structure

question

The buying function overcomes which of the five barriers to consumer satisfaction

answer

Ownership Serparation

question

Time utility means that the product must be available where the consumer wants it. (T/F)

answer

False

question

Which of the following has not increased the efficiency of the marketing system?

answer

Monopolies

question

The structure conduct performance (SCP) model evaluates marketing systems on

answer

-How efficiently it meets consumer needs
-How effectively it generates profits
- How fairly it meets consumer needs

question

__________ involves examining revenue and expenses to determine if the company is meeting its objectives.

answer

Financial Analysis

question

The organizing function within management

answer

includes developing a structure for putting plans into action

question

The planning function within management:

answer

includes all activities that determine the future direction of the organization

question

The macroeconomic approach to measuring market potential focuses on

answer

Gross Domestic Product (GDP) of a region

question

Which does the marketing mix consist of?

answer

Price, Product, Promotion, and Place

question

In a SWOT Analysis, what dimensions are "external" to marketing strategy?

answer

Opportunities and Threats

question

Analyzing alternatives is an important step in the decision making process that managers face. Which of these is not part of the three-step process for analyzing alternatives?

answer

Listing of the alternatives

question

Economic states which include consumption, retailing, wholesaling, processing, assembly, and production describe:

answer

a marketing system

question

Place utility means that:

answer

the product must be available where the consumer wants it

question

Loss Leader pricing is focused on pricing at the "going rate"

answer

False

question

A great strategic plan without flawless execution is like having no plan at all

answer

True

question

Good budgeting tales the place of good management

answer

False

question

An extrapolation forecasting procedure is naive

answer

True

question

If own-price elasticity is unitary, the a price decrease will.

answer

Have no effect on total revenue

question

Assume that you are getting a raise, which increases disposable income by 7%. The income elasticity for a steak is 1.265. What impact would this raise have upon the demand for steak?

answer

Demand would increase by 8.85%

question

In the question above, what type of good is steak?

answer

normal, luxury

question

Graphical analysis is important in forecasting because

answer

it provides a visual shift representation of the data

question

Futures markets provide the agri-food system with a way to

answer

reduce price risk

question

Forecasts of future levels of major economic variables such as GDP are important to agribusinesses because

answer

They are likely related to a firm's sales and costs

question

Which of these is not one of the five factors that influence forecast selection

answer

the objective of the firm

question

When you are measuring the quality of your forecasts, if your forecast error has a combination of both positive and negative values, you are better off using

answer

mean square error

question

Suppose that the own price elasticity for Andy Gator is -1.25. In order for Abita to increase total revenue, at least in the short run, it would be advisable to

answer

Lower the price of the Andy Gator

question

Which of these cannot cause a shift in demand

answer

Price of the own good

question

Which of these is likely to have the most elastic demand curve

answer

Sara Lee low sodium ham

question

The business vision statement, the strategic plan , the implementation of the strategic plan

answer

are the three parts of strategic management

question

Which one of these is not one of the five forces

answer

The threat of a new business leaving a firm's existing market

question

What a business is going to do better, faster, quicker, and cheaper than anyone else is a firm's

answer

sustainable competitive advantage

question

A firm's external environment includes what

answer

Market opportunities, market threats

question

Suppose that the own price elasticity of a Rotolo's calzone is -1.38. This suggests that if the price of a rotolo's calzone declines by 5%, the quantity of Rotolo's calzones demanded will

answer

increase by 6.9%

question

The timing of cash that is expected to flow in and out of the business during the budgeting period should be the same as the timing of the flows in the operating budget: (T/F)

answer

False

question

If you were surveying all Louisiana households about how much gumbo they consume in a single year, the data you would collect would most likely be an example of

answer

Cross-sectional data

question

The time permitted to develop a forecast represents a factor that influences forecasts.

answer

True

question

The movement from A to B on the graph below represents what concept of consumer demand

answer

a change in the quantity demanded

question

Refer to the table above and using a four-month simple average, forecast price for period July.

answer

4.85

question

Profitability (net Income) is measured from the

answer

operating budget

question

Which type of budget may best model the seasonality of a firm's revenue in a given year.

answer

Cash flow budget

question

Which type of budget explicitly breaks out the variable expenses from the fixed expenses?

answer

operating budget

question

Adjusting for population is not applied in forecasting

answer

False

question

Cyclical Patterns of prices and quantities are most often seen in

answer

Livestock

question

An extrapolation forecasting procedure is naive (T/F)

answer

True

question

answer

Sales of Pepsi would fall by 30 units

question

What is the demad relationship between the product in the previous question?

answer

Substitutes

question

Developing an effective organizational structure is important because it

answer

Impacts financial and marketing performance

question

These employees have the ability to make decisions

answer

Line

question

Autonomous profit centers (business units) offer all of the following benefits except

answer

slow feedback on performance

question

Which type of legal structure is limited to 75 shareholders

answer

Sub chapter S corporations

question

Double taxation involves

answer

profits being taxed and then dividends received by shareholders being taxed

question

There is one single best legal structure for all firms

answer

False

question

The most complex legal structure is

answer

Corporation

question

General characteristics of a partnership include all but which of the following

answer

Multiple business records for each partner

question

Once a company sells more units of a product than are required to break even, the company will make a profit

answer

True

question

The contribution margin in break-even analysis is derived by subtracting

answer

variable cost per unit from output price

question

In the long run, a firm will produce even if price does not cover all costs so long contribution per unit is positive

answer

Flase

question

answer

$62,500

question

Returns increase at an increasing rate, increase at a decreasing rate, reach a maximum, and then declines the economic principle of

answer

Diminishing Marginal Returns

question

The profit-maximizing production area is between the minimum efficiency level of input use and the maximum efficiency level of input use.

answer

Flase

question

What group of individuals typically help a firm determine technical efficiency

answer

Production managers

question

In any production process the marginal product of an input equals:

answer

the change in total output divided by the change in the input

question

In what way does average fixed cost per unit change as output rises?

answer

It reduces average fixed cost per unit, because a given fixed cost can be spread across more units of output

question

answer

He should work 38 hours per week, because this is the workload that maximizes his net revenue (profit).

question

What is on the horizontal (x) axis when we draw the graphs for the total product, average product, and the marginal curves?

answer

Quantity of the input

question

Break-even analysis can be used to evaluate effectiveness of advertising. (T/F)

answer

True

question

The contribution per unit is made to

answer

-Profits
-Paying off fixed costs

question

If the price of the product is greater than the break-even price, the firm should quit producing. (T/F)

answer

False

question

By comparing marginal revenue and marginal cost, can managers determine the optimal level of output? (T/F)

answer

True

question

The principle of equi-marginal allocation always leads to production in the third stage. (T/F)

answer

False

question

answer

Decreasing marginal physical product would set in the hiring of the fifth worker

question

If average product is decreasing, the marginal product:

answer

must be less than average product

question

Economists assume that producers try to maximize

answer

profit

question

If 25 workers can pick 100 flats of strawberries per hour, then average product is

answer

4 flats per hour

question

From the following table, determine the marginal product of labor when the firm increases from three to four units of labor input

answer

question

In decentralized decision making, more decision making authority is given to

answer

lower level management

question

The matrix approach to organizing work is where employees are responsible to two or more bosses

answer

true

question

What are the four principles of organization design

answer

-Keep the organization structure simple
-give critical tasks prominence and allow them to function without restriction
-keep support staff to a minimum
-keep working units small

question

An effective business structure is important to accomplishing the business objectives of an agribusiness

answer

true

question

corporations

answer

have the greatest access to capital

question

What are the characteristics of a limited liability company

answer

-all members may enjoy limited liability
-all members participate freely in management
-individuals are taxed as partners

question

A sole proprietorship is an organizational structure where an individual owns, manages, assumes all the risk, and derives all the profit from a business

answer

true

question

Choosing a legal business structure falls within which function of management?

answer

organizing

question

What are the differences between S and C corporations?

answer

- Rate and method taxed by the federal government
-The number of shareholders
-Who is allowed to be a shareholder

question

What is included in a written partnership?

answer

question

What is the basic accounting equation?

answer

Total Assets= Total liabilities+ Owner's equity

question

Accounting documents are part of the controlling function of management.(T/F)

answer

True

question

The quick ratio will always be less than or equal to the current ratio.(T/F)

answer

True

question

Net working capital can be changed by

answer

selling a piece of equipment for cash

question

Liquidity ratios can be obtained from information on the balance sheet, while activity ratios require information obtained from the

answer

income statement and balance sheet

question

Methods of analyzing financial statements include

answer

-Comparative analysis
-Ratio Analysis

question

_________ focuses on the long-term decision-making regarding the acquisition of projects

answer

capital budgeting

question

If the cost benefit ratio is less than one, then the net present value must be

answer

question

The discount rate used by the firm for evaluating projects is called the:

answer

weighted average of cost capital

question

If the Net Present Values of two, mutually exclusive options are both greater than zero, which option should be selected of the firm uses the Net Present Value method?

answer

The one with the largest net present value

question

___________ indicates how much of a company's net worth and asset commitment is being financed with debt

answer

Solvency ratios

question

Accelerated cost recovery and investment taxed credits

answer

Encourage business investment

question

The return on invested capital ration will always be less than or equal to the return on owners equity ratio. (T/F)

answer

True

question

Compounding is

answer

-the opposite of discounting
-finding the value of something in the future

question

The payback method is flawed because

answer

it does not consider time value of money

question

The best way to analyze the decision of whether to buy, borrow, or lease assets is

answer

Net Present Value

question

A good proxy for the opportunity cost of capital for an investor is

answer

the market average return on investment for the industry he/she is investing in

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