AGECON 110~ Quiz Questions and Review

The minimum wage lowers unemployment rates. T/F

False

Correlation is the same as causation. T/F

False

Inflation is a possible consequence of raising minimum wage. T/F

True

Critics of capitalism ignore the fact that citizens move between income groups. T/F

True

What are the requirements for economics?

Scarcity, self-interest, and choice

Opportunity costs are not always monetary in nature. T/F

True

Macroeconomics and market economics are the two major subdivisions of economics. T/F

False

The government owns resources in communism. T/F

True

What are the five questions that an economic system must answer?

What to produce, how to produce it, how much to produce, when to produce, and for whom to produce

Opportunity costs are the value of the next highest cost alternative given up when making a decision. T/F

True

What is an example of a public good? : Milkshakes, national defense, televisions, or tractors?

National defense

What best demonstrates the logical fallacy of if its good for one, its good for all?

Minimum wage increase

Government can solve some of society's ills. T/F

True

The majority of U.S. farms are owned by corporations. T/F

False

Only a fraction of every dollar you spend goes to the production sector. T/F

True

In general, the number of U.S. farms and the size of U.S. farms has been increasing. T/F

False

The majority of U.S. farms are considered to be small family farms. T/F

True

More than half of every dollar spent on food in the U.S. home is consumed away from home. T/F

True

Increased U.S. farm productivity has led to fewer total U.S. farms. T/F

True

Vertical integration is when one firm owns multiple stages of a production process. T/F

True

U.S. agriculture has become increasingly less efficient. T/F

False

What is the result of agricultural trade to U.S. agricultural commodities?

Increased value of commodity

Which of the following are not part of the agricultural supply chain? : Government, marketers, or processors

None of the above

What must happen to make a budget line shift?

Income change

What best illustrates the substitution effect of a price change?

Changing points along the same indifference curve

What best illustrates the income effect?

Changing points along a different indifference curve

What is an indifference curve?

Willingness to trade one good for another with constant utility

What is the substitution effect?

Substitute one product for a second due to price change of one good

What is the income effect?

Change in price of a product results in ability to buy more/less of a good

When the income effect occurs, what best describes the utility level?

Utility changes

Along a substitution curve, the marginal rate of substitution varies. T/F

True

If the price of one good increases while the other stays constant, what happens to utility?

Decrease

What is a normal good?

A good that consumers buy more of when their income increases (positive coefficients in the income elasticity of demand)

What is an inferior good?

A good that consumers buy less of when their income increases (negative coefficients in the income elasticity of demand)

What is an elastic good?

A luxury good (absolute value greater than one in own price elasticity)

What is an inelastic good?

A necessity (absolute vale of less than one in own price elasticity)

How do you identify a unitary good?

Absolute value of one in own price elasticity

What are substitutes?

Goods used in place of one another (positive coefficients in cross-price elasticity)

What are complements?

Goods used with one another (negative coefficients in cross-price elasticity)

What is Engel's Law?

As disposable income increases, the percentage of income spent on food decreases if all other factors are constant

Perfectly competitive markets have what kind of products?

Homogeneous

Long run profits are possible in oligopolies. T/F

True

Long run economic profits are possible in perfectly competitive situations. T/F

False

Changes to supply curves in terms of being more elastic/inelastic reflects what?

Changing resource base to be used

Which of the following components of the gross domestic product are productive sectors of the economy? : Government, business investment, or consumer spending

Business investment and consumer spending

Firms that have a pricing decision are operating in a perfectly competitive market situation. T/F

False

What best describes a monopsony?

One buyer

Which of the following is not an example of market failure? : Efficiency, externalities, market power, or barriers to entry

Efficiency

A firm in a perfectly competitive market can raise the price and sell more product? T/F

False

Perfectly competitive markets produce higher quantity at a lower price than other market structures. T/F

True

A market has a price below equilibrium price. What is true about the market?

Shortage

Which of the following is associated with economies of scale? : Average variable cost, marginal revenue, or average total cost

Average total cost

Which of the following is not a function of money? : Medium of exchange, easily divisible into smaller parts, or a basis for accounting

Easily divisible into smaller parts

The U.S. agriculture economy has a positive trade balance. T/F

True

Which of the following is not a goal of macroeconomic policy? : Full unemployment, full employment, stable prices, or economic growth

Full unemployment

Which type of unemployment most effects agriculture?

Seasonal

When you purchase gas, what kind of prices do you see?

Nominal

Why is there a difference in total value when compounded monthly versus compounded annually when the annual interest rate is the same?

Since the interest is compounded more often in the monthly one, more interest is accumulated.

Animal rights is the philosophy that believes that animals should have the same legal rights as humans. T/F

True

The USDA and the FDA are the federal agencies that are responsible for the inspection of cell-cultured meat. T/F

True

What is the term used by economists to determine impacts of policy changes to society?

Welfare

U.S. farm income is expected to increase this year as a result of the COVID-19 pandemic. T/F

True

Which category of food items results in the greatest amount of waste by caloric content?

Fats and oils, then sugars/sweeteners, then grains

Banning of agricultural production practices are often economic welfare decreasing. T/F

True

Novelty is a barrier to consumer acceptance of cell-cultured meat. T/F

True

The U.S. food supply chain was able to easily switch from providing food from consumption away from home to at home due to the COVID-19 pandemic. T/F

False

Food insecurity refers to households. T/F

True