Name: 
 

2003 State Cooperative Education Test



Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

 1. 

A cooperative is owned by its:
a.
members
c.
lenders
b.
investors
d.
none of these are correct
 

 2. 

A cooperative is usually controlled on the basis of:
a.
amounts of stock held by investors
b.
1 vote per member
c.
notes held by lender
d.
number of OSU football games attended
 

 3. 

A cooperative distributes benefits based on:
a.
years of membership
b.
amount of investment in the cooperative
c.
use of the cooperative’s services
d.
how old the member is on January 1st.
 

 4. 

Cooperatives operate to maximize:
a.
profits to be retained by the cooperative
b.
return on investments in the cooperative
c.
profits for member/patrons
d.
retirement benefits of managers only
 

 5. 

Farmers marketing, supply, and service cooperatives in the United States total about:
a.
5,000
b.
2 million
c.
50,000
d.
2 trillion
 

 6. 

Memberships in farmer marketing, supply, and service cooperatives in the United States total about:
a.
1 million
b.
2 million
c.
4 million
d.
8 million
e.
16 million
 

 7. 

About what percent of major farm inputs do farmers buy from their cooperatives:
a.
25%
b.
50%
c.
75%
d.
100%
 

 8. 

About what percent of their products do farmers market through their cooperatives”
a.
25%
b.
50%
c.
75%
d.
100%
 

 9. 

People organize cooperatives to:
a.
reduce costs
b.
obtain products or services otherwise not available
c.
obtain market access
d.
increase income
e.
all of these are correct
 

 10. 

A cooperative is defined as a:
a.
User-owned and democratically controlled business which benefits are received in proportion to use
b.
Investor-owned and controlled business in which the purpose is to maximize return on investments in the business
c.
Government financed business controlled by elected federal officials
 

 11. 

Member-uses control their cooperatives on the basis of:
a.
years of membership
b.
amount of members’ equity
c.
one-member, one-vote or voting according to use
d.
all of these are correct
 

 12. 

A cooperative’s primary benefits are derived from:
a.
products and services provided
b.
accrued members’ equity for retirement
c.
dividends on money invested in it
d.
number of season ticket holders for OSU football games
 

 13. 

Combined annual net sales volume of farmer marketing, purchasing, and service cooperatives is:
a.
less than $50 billion
c.
more than $100 billion
b.
about $70 billion
d.
about $700 billion
 

 14. 

Farmer cooperatives operate to:
a.
maximize profits for growth
b.
maximize profits for farmer-members
c.
maximize value of farmer-members’ stock
d.
no good choice is available
 

 15. 

It is necessary to own stock in a cooperative to have the right to vote:
a.
true
b.
false
c.
would depend on which political part you support
 

 16. 

Cooperatives can operate at lower costs per unit than farmers can individually by:
a.
providing services for several or many farmers
b.
hiring inexperienced managers
c.
handling smaller volumes
d.
all of these are correct
 

 17. 

A cooperative that increases competition in a market could:
a.
raise the going market prices for farm products
b.
keep other firms from taking advantage of farmers
c.
make the market more competitive
d.
all of these are correct
 

 18. 

Cooperatives limit returns on equity capital because:
a.
cooperatives do not require as much capital as investor oriented businesses
b.
they are not concerned about making a profit
c.
they want to discourage investment by patrons
d.
all of these are correct
 

 19. 

Cooperatives increase farm income by:
a.
providing farmers higher prices for their products and lower prices for farm supplies
b.
increasing per-unit costs
c.
not distributing any net savings
d.
all of these are correct
e.
none of these are correct
 

 20. 

Cooperatives are organized to:
a.
maximize net income
b.
minimize costs of operation
c.
provide services as economically as possible
d.
all of these are correct
 

 21. 

Cooperatives benefit farmers because:
a.
individual farmers produce relatively small volumes
b.
individual farmers produce so many different products that are well known to consumers
c.
individual farmers produce large volumes
d.
all of these are correct
 

 22. 

A supply cooperative that “operates at cost”:
a.
charges less than the going market prices
b.
charges prevailing market prices
c.
charges prices for supplies that are about equal to its costs
d.
all of these are correct
 

 23. 

An example of vertical integration by purchasing cooperatives is:
a.
regional cooperatives producing some of their raw material requirements
b.
contracting with growers to produce seed stocks under specifications
c.
oil exploration to help supply crude oil for refineries and spread risks and opportunities for net margins
d.
all of these are correct
 

 24. 

Purchasing cooperatives benefit farmers by:
a.
Lowering the cost of production supplies
b.
Increasing the daily purchasing price levels in many trade areas
c.
Enhancing the gross margin of competing firms
d.
All of these are correct
 

 25. 

People join a cooperative:
a.
because of social objectives
b.
economic benefits--services and increased income
c.
for investment purposes
d.
to get better seats for OSU home football games
e.
because of social objectives, economic benefits--services and increased income and for investment purposes only
 

 26. 

Multi-State and national cooperatives are created to:
a.
provide an investment alternative for member cooperatives
b.
expand horizontally the operations of member cooperatives
c.
help existing cooperatives gain economic efficiencies and increase market power nationally and internationally
d.
all of these are correct
 

 27. 

The cooperative principle of “operations at cost” is usually accomplished by:
a.
setting prices in order to cover expenses
b.
refunding to patrons any net margins remaining after deducting operating expenses
c.
retaining net margins remaining after deducting operating expenses and investing them in the cooperative
d.
all of these are correct
 

 28. 

The primary reason for farmers joining cooperatives is to:
a.
improve their well-being
c.
gain greater knowledge of agriculture
b.
drive other firms out of business
d.
help the community
 

 29. 

If the average costs of cooperatives decreases as they get larger they will likely:
a.
reduce the size of their business
c.
keep their business the same size
b.
expand the size of their business
d.
none of these are correct
 

 30. 

Auction cooperatives:
a.
determine sales prices on commission basis
b.
determine sales price through open bidding
c.
is the only way OSU football ticket scalpers get tickets in Columbus
d.
none of these are correct
 

 31. 

Orderly marketing requires:
a.
a degree of control over the product
b.
advance information on product volumes available
c.
authority to make firm sales commitments
d.
all of these are correct
 

 32. 

Marketing cooperatives are able to expand markets for members products by:
a.
developing net products
b.
expanding geographically
c.
making products bigger
d.
developing net products and expanding geographically
 

 33. 

All democratically controlled marketing cooperatives allow one vote per member.
a.
True
b.
False
c.
Correct choice not listed
 

 34. 

“Mixed” cooperatives are characterized by:
a.
handling many different types of products
b.
providing both farm supplies and marketing services
c.
serving both member-farmer and member cooperatives
d.
none of these are correct
 

 35. 

Farmers began organizing marketing cooperatives in the U.S :
a.
only recently
c.
during wartime
b.
in the 1800s
d.
not sure about this question
 

 36. 

Bargaining cooperatives generally:
a.
take title and physical possession of member products
b.
perform processing functions
c.
do not take title or physical possession of member products
 

 37. 

A cooperative engaged in growing agricultural products:
a.
may become a member of a marketing cooperative
b.
is a cooperative
c.
may not become a member of a marketing cooperative
 

 38. 

Agricultural producers generally lack bargaining power because:
a.
individual farmers produce relatively small volumes
b.
lack of product differentiation
c.
large size of food processor
d.
all of these are correct
 

 39. 

Diversified cooperatives usually have:
a.
cost sharing among products
b.
more uniformity of patrons
c.
more practical uniform pricing practices
d.
all of these are correct
 

 40. 

Forward integration is:
a.
expansion into new trade territories
b.
carrying out activities which move products closer to the consumer
c.
cooperatives involvement in agricultural production
 

 41. 

Stages of Product Life Cycle include:
a.
adolescence
b.
maturity
c.
infancy
 

 42. 

Differential pricing means:
a.
pricing different products differently
b.
setting different prices in different trade areas
c.
using discounts and premiums
d.
adjusting a car transmission price
 

 43. 

The four P’s of marketing are: Product, Place, Profit and Promotion.
a.
true
b.
false
c.
still researching the answer, but good question
 

 44. 

Federal and State laws are regulations usually specifying:
a.
the number of members a marketing cooperative may have
b.
that member business must be greater than nonmember business in a marketing cooperative
c.
the geographic boundaries of a cooperative’s trade area
 

 45. 

Barriers to a new product development for some cooperatives include:
a.
uncertain returns
c.
high costs
b.
likelihood of copying by competitors
d.
both uncertain returns and high costs
 

 46. 

The marketing technique used to create a unique image for a product is called:
a.
product differential
c.
market segmentation
b.
market differential
d.
product segmentation
 

 47. 

The marketing technique used to create a unique image for a product is called:
a.
product differential
c.
market segmentation
b.
market differential
d.
product segmentation
 

 48. 

Price maintenance is a policy designed to:
a.
generate relatively large margins
c.
generate relatively small margins
b.
maintain below-market prices
 

 49. 

For price differentials to be successful, cooperatives must:
a.
price uniformly to all patrons
b.
separate patrons into categories according to volume, location, method of payment, or other criteria
c.
offer no discounts or premiums
 

 50. 

Uniform pricing among members is a cooperative principle and a legal requirement.
a.
true
b.
false
c.
depends solely on which political party of members
 

 51. 

The objectives of structural arrangements such as joint ventures, marketing agencies in common, and holding companies include:
a.
to increase market power
c.
to gain efficiency in operations
b.
to gain market entry
d.
all of these are correct
 

 52. 

A marketing agency-in-common is:
a.
a brokerage firm hired jointly by two or more cooperatives
b.
a jointly-owned cooperative warehousing operation
c.
like a federated cooperative that serves as a marketing agent of its members
 

 53. 

A key element of pooling is:
a.
sales are handled on an individual account basis
b.
risk-sharing
c.
cash-at-delivery
d.
not sure of right answer, sorry
 

 54. 

A cooperative which integrates vertically:
a.
adds branch facilities to perform the same types of services
b.
performs more functions or services to the same product as it moves from farmer to consumer
c.
allows clients to jump start payments every other month, vertically revising pay down on goods and services to save enough to buy one week groceries
 

 55. 

Benefits of marketing cooperatives include which of the following:
a.
expanded markets
b.
loss of market power
c.
increased farm income
d.
both expanded markets and increased farm income
e.
all of these are correct
 

 56. 

Approval of the budget is the responsibility of the:
a.
manager
b.
treasurer
c.
directors
d.
auditor
 

 57. 

In a local cooperative, checks to pay the bills are usually prepared by the:
a.
manager
b.
treasurer
c.
board president
d.
auditor
 

 58. 

Making sure the financial records are accurate is the responsibility of the:
a.
manager
b.
treasurer
c.
board president
d.
auditor
 

 59. 

An independent review of the financial records is conducted by the:
a.
manager
b.
treasurer
c.
board president
d.
auditor
 

 60. 

Determining whether the cooperative will extend credit to members and if yes, on net terms is the responsibility of the:
a.
manager
b.
treasurer
c.
directors
d.
auditor
 

 61. 

Approving individual applications for credit is the responsibility of the:
a.
manager
b.
treasurer
c.
directors
d.
auditor
 

 62. 

The auditor should be required to send the audit report:
a.
only to the treasurer
c.
only to the directors
b.
only to the manager
d.
to the manager and the director
 

 63. 

If the directors are to receive compensation for serving, the level of pay should be set by the:
a.
board president
b.
manager
c.
members
d.
treasurer
 

 64. 

Determining how the cooperative will allocate a loss is the responsibility of the:
a.
directors
b.
manager
c.
members
d.
treasurer
 

 65. 

Making sure notices of upcoming meetings are sent to the members is the responsibility of the:
a.
manager
b.
board president
c.
secretary
d.
attorney
 



 
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