Cooperative Education Test #1

Name:

True/False

Indicate whether the sentence or statement is true or false.

Market prices provide all the information needed by firms to make decisions regarding what and how much to produce.

Marketing cooperatives try to maximize member’s income by handling large volumes, thereby reducing per-unit marketing costs.

Centralized cooperatives serve local co-op members from a central location

Uniform pricing among members is a cooperatives principle and a legal requirement.

Multiple Choice

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

The primary motivation for farmer participation in cooperatives is:

a.	To improve their well-being
b.	To drive others out of business
c.	To improve the well being of the society
d.	None of these are correct

Economic growth generally implies:

a.	No change in trade between economic units
b.	Increased trade between economic units
c.	Decreased trade between trade units
d.	None of these are correct

Economies of size mean:

a.	Costs increase as firms get larger	c.	Costs decrease as firms get larger
b.	Profits increase as firms get larger	d.	Revenues increase as firms get larger

Economics of size encourages firms to expand:

a.	Horizontally	c.	Both horizontally and vertically
b.	Vertically	d.	None of these are correct

If markets were perfect:

a.	Investor-oriented firms and cooperatives would be preferred
b.	No particular form of business organization would be preferred
c.	Cooperatives would be preferred
d.	Both investor-oriented firms and cooperatives would be preferred

10.

Economies of size:

a.	Can enhance the competitiveness of a market
b.	Will have no effect on the competitiveness of a market
c.	Can cause imperfect markets
d.	None of these are correct

11.

An oligopolist is one of:

a.	A few sellers	b.	A few buyers	c.	Many sellers	d.	Many buyers

12.

An oligopsonist is one of:

a.	A few sellers	b.	A few buyers	c.	Many sellers	d.	Many buyers

13.

An oligopolist may establish prices to the disadvantage of:

a.	Stockholders	c.	Buyers
b.	Sellers	d.	Both stockholders and buyers

14.

An oligopsonist may establish process to the disadvantage of:

a.	Sellers	b.	Buyers	c.	Stockholders

15.

With limited economies of size, spatial (geographical) dimensions:

a.	Can decrease the competitiveness of a market
b.	Can increase the competitiveness of a market
c.	Will have no effect on the competitiveness of a market
d.	None of these are correct

16.

As grain elevators in a region become fewer and larger:

a.	Cost of transporting grain by farmers may increase
b.	Cost of transporting grain by farmers may decrease
c.	Cost of transporting grain by farmers will not change
d.	None of these are correct

17.

The cost of information:

a.	May result in a source of market imperfection
b.	May increase market efficiency
c.	May result in a source of market imperfection and may increase market efficiency

18.

A farmer getting more land to expand his production would be an example of:

a.	Vertical integration
b.	Horizontal integration
c.	Both vertical and horizontal integration
d.	None of these are correct

19.

Farmers buying a processing plant for their products would be an example of:

a.	Horizontal integration	c.	Both horizontal and vertical integration
b.	Vertical integration	d.	None of these are correct

20.

An imperfect market provides incentives for farmers to:

a.	Vertically integrate
b.	Horizontally integrate
c.	Neither vertically or horizontally integrate
d.	Depends on the farmer

21.

A spatial monopoly is where a:

a.	Few buyers control a geographical region
b.	Few sellers control a geographical region
c.	Single buyer controls a geographical region
d.	Single buyer controls a geographical region

22.

A spatial monosopy is where a:

a.	Few buyers control a geographical region
b.	Few sellers control a geographical region
c.	Single buyer controls a geographical region
d.	Single seller controls a geographical region

23.

The potential for cooperatives helping farmers through better coordination of inputs, production, and marketing appears to:

a.	Not exist	b.	Be small	c.	Be quite large

24.

Cooperatives allow farmers to:

a.	Gain cost efficiencies while reducing concerns about monopsonistic profits
b.	Gain cost efficiencies while increasing monopsonistic profits
c.	Achieve total control over prices
d.	None of these are correct

25.

In competitive long run equilibrium, process and outputs of cooperatives and investor-oriented firms will be:

a.	The same	b.	Much different	c.	A little different

26.

If members of a marketing cooperative include potential patronage refunds in their production decisions, these members will likely:

a.	Not change their production
b.	Decrease production
c.	Increase production

27.

Economic growth generally implies:

a.	Increased specialization
b.	Increased trade between economic units
c.	Larger firms operating at each level of an economic units
d.	All of these are correct

28.

Formal economic theories of cooperatives have evolved since the:

a.	1930’s	b.	1940’s	c.	1950’s	d.	1960’s

29.

An investor-oriented firm should operate where:

a.	Marginal revenue > marginal cost	c.	Marginal revenue = marginal cost
b.	Marginal revenue < marginal cost	d.	None of these are correct

30.

Marginal revenue is the:

a.	Change in revenue associated with a one unit change in output
b.	Change in revenue associated with a one unit change in input
c.	Margin which a cooperative earns on revenues
d.	Change in total revenue

31.

A firm in a perfectly competitive market faces a:

a.	Downward sloping demand curve	c.	Horizontal demand curve
b.	Vertical demand curve	d.	Upward sloping demand curve

32.

A cooperative in a perfectly competitive market will:

a.	Advertise
b.	Not advertise
c.	Only advertise if the situation

33.

For a firm in a less than competitive market:

a.	Average revenue < marginal revenue	c.	Marginal revenue = average revenue
b.	Average revenue > marginal revenue	d.	None of these are correct

34.

A supply cooperative operating where average total cost = average revenue would be following which objective:

a.	Maximize the net price received by patrons
b.	Maximize net income
c.	Operate at cost
d.	Minimize net price paid by patrons

35.

A supply cooperative operating where marginal cost = marginal revenue would be following which objective:

a.	Maximize the net price received by patrons
b.	Operate at cost
c.	Minimize net price paid by patrons
d.	Maximize net income

36.

If a supply cooperative wants to minimize the net price paid by patrons before patronage refunds, where should they operate?

a.	Where average cost = average revenue
b.	Where marginal revenue = marginal cost
c.	Where marginal costs = marginal revenue
d.	None of these are correct

37.

If a supply cooperative wants to minimize the net price paid by patrons after patronage refunds have been distributed, where should they operate?

a.	Where the marginal cost = marginal revenue
b.	Where the average total cost = average revenue
c.	Where the marginal cost = average total cost
d.	Indeterminate

38.

Is the equilibrium stable if a cooperative attempts to maximize net income?

a.	Yes
b.	No
c.	Depends on other factors

39.

Is the equilibrium stable if a supply cooperative attempts to operate at cost?

a.	Yes
b.	No
c.	Depends on other factors

40.

Is the equilibrium stable if a supply attempts to minimize net price paid by patrons:

a.	Yes
b.	No
c.	Depends on other factors

41.

If a supply cooperative has high production levels which keeps patrons from achieving the lowest cost, an incentive exists to:

a.	Freeze the current membership numbers
b.	Expand the current membership
c.	Restrict the current membership

42.

Supply cooperatives operating in the declining cost portion of their cost function have an incentive to:

a.	Restrict nonmember business
b.	Expand nonmember business
c.	Freeze the amount of nonmember business

43.

Gains in vertical coordination through cooperatives require:

a.	A decrease in the scope of decision making by members
b.	An increase in the scope of decision making by members
c.	No change in the scope of decision making by members

44.

Marginal net revenue (marginal revenue product) is defined as:

a.	The margin which a cooperative receives from its revenues
b.	The change in revenue associated with a one unit change in output
c.	The change in revenue associated with a one unit change in input

45.

For a perfectly competitive input market:

a.	Marginal input cost < average input cost (supply)
b.	Marginal input cost > average input cost (supply)
c.	Marginal cost = average input cost (supply)

46.

For a less than perfectly competitive input market:

a.	Marginal input cost < average input cost (supply)
b.	Marginal input cost = average input cost (supply)
c.	Marginal input cost > average input cost (supply)
d.	None of these are correct

47.

A marketing cooperative wishing to maximize the net price received by patrons should operate where:

a.	Average net revenue = average input cost (supply)
b.	Marginal net revenue = marginal input cost
c.	Marginal net revenue = average net revenue

48.

A marketing cooperative wishing to maximize income like an investor-oriented firm should operate where:

a.	Average net revenue = average input cost (supply)
b.	Marginal net revenue = marginal input cost
c.	Marginal net revenue - average net revenue

49.

A marketing cooperative wishing to operate at cost should operate where:

a.	Marginal net revenue = marginal input cost
b.	Average net revenue = average input cost (supply)
c.	Marginal net revenue = average net revenue

50.

The objective which would give members of a marketing cooperative the lowest price for their product before considering patronage refunds is:

a.	Operate at cost
b.	Maximize net price received by patrons
c.	Maximize net income like an investor oriented firm

51.

The objective which would give members of a marketing cooperative the lowest price for their product after considering patronage refunds is:

a.	Maximize net income like an investor- oriented firm
b.	Operate at cost
c.	Maximize net price received by patrons

52.

The objective which would give members of a marketing cooperative the highest price for their product before considering patronage refunds includes

a.	Maximize net price received by patrons
b.	Operating at cost
c.	Maximizing net income like an investor-oriented firm
d.	None of these are correct

53.

Marketing cooperatives may declare patronage refunds to:

a.	Members only
b.	Non-members only
c.	Both Non-members and members

54.

In developing broader markets for member’s products, cooperatives help to:

a.	Decrease competition
b.	Stabilize prices
c.	Both decrease competition and stabilize prices

55.

Cooperatives which contract for production of poultry and livestock provide:

a.	Breeding stock, feed, technical and managerial assistance, processing and marketing services
b.	Processing and marketing processes only
c.	Land, labor and facilities

56.

Producers who contract with a cooperative to provide poultry or livestock are paid:

a.	Full market value	b.	Wholesale price	c.	A fee per unit

57.

Elasticity of demand, as it relates to cooperatives is:

a.	A measurement of patron responsiveness to a change in price
b.	A measurement of price responsiveness to a change in quantity
c.	Neither a measurement of patron or price responsiveness to a change in price or quantity

58.

Patrons with a more elastic demand are:

a.	Less responsive to price changes
b.	More responsive to price changes
c.	Not responsive to price changes

59.

The demand curve for large-volume patrons may be more elastic because:

a.	Many agribusiness firms offer favorable prices to large-volume patrons
b.	Many agribusiness firms do not offer favorable prices to large-volume patrons

60.

Netting is a policy of:

a.	Discounting prices based on promptness of payment
b.	Establishing prices so that losses in one division are absorbed by the net income of another division
c.	Subtracting costs from revenue

61.

A distribution strategy is:

a.	A plan for paying patronage refunds to members
b.	Organizational or institutional linkages that perform marketing functions
c.	Equity revolvement practices

62.

A primary characteristic of competitive markets is (are) :

a.	A large number of buyers and sellers
b.	A small number of buyers
c.	A large number of sellers

63.

An efficient market depends on:

a.	Low prices
b.	Concentration of market power
c.	Availability of information

64.

The presence of a cooperative in a market may be the result of:

a.	Market failure
b.	the need to assure market outlets or supplies
c.	The desire to capture profits from another level in the marketing system

65.

If the price received by suppliers of the product decreases :

a.	The demand for the product must be relatively elastic	b.	The demand for the product must be relatively inelastic

66.

The market planner should be most concerned with:

a.	The market price	c.	The competitor’s price
b.	The product he is marketing	d.	The potential customer

67.

The major channel(s) utilized to market cooperative products are:

a.	Wholesaling and retailing	c.	Selling
b.	Manufacturing	d.	Warehousing

68.

Which of the following can be said to be included in cooperative marketing activities?

a.	Warehousing
b.	Transportation
c.	Retailing and wholesaling
d.	Communications
e.	All of these are correct

69.

To say that the demand for a commodity is elastic means:

a.	That the demand curve slopes downward and to the right
b.	That a greater quantity is sold at a lower price
c.	That a rise in price will increase total revenue
d.	That the change in quantity sold is proportionally greater than the change in price

70.

When the demand for a product is elastic:

a.	A fall in price is more than offset by an increase in quantity sold, so that total revenue, even though less is sold
b.	A rise in price will increase total revenue, even though less is sold
c.	Buyers are not much influenced by prices of competing products

71.

The demand for vegetables is probably more elastic than the demand for:

a.	Food	b.	Carrots	c.	Spinach	d.	Automobiles

72.

A demand curve is completely inelastic if:

a.	A rise in price causes a fall in quantity demanded
b.	A fall in price causes a rise in the sellers’ total revenue
c.	The commodity in question is highly perishable
d.	A change in price does not change quantity demanded

73.

If the government imposes a tax on a commodity, it will obtain the most revenue if the demand for the product is:

a.	Perfectly inelastic
b.	Relatively inelastic
c.	Perfectly elastic
d.	Relatively elastic

74.

If the demand is relatively elastic, a change in price (up or down) causes:

a.	A change in total revenue
b.	A change in total revenue in the opposite direction
c.	An increase in total revenue
d.	A decrease in total revenue
e.	None of these are correct

75.

If the demand is relatively inelastic, a change in price (up or down) causes:

a.	A change in total revenue in the same direction
b.	A change in total revenue in the opposite direction
c.	An increase in total revenue
d.	A decrease in total revenue
e.	No change in total revenue

76.

How can a farmer spread his risk?

a.	Plant a diversified crop
b.	Use future markets
c.	Use the loan markets
d.	All of these are correct
e.	Both plant a diversified crop and use future markets

77.

Through marketing cooperatives:

a.	Farmers extend control over their production at least one step past the farm gate
b.	Members have a voice in the distribution and sale of the commodity
c.	Members can be more insulated from price fluctuations than if they bargained individually
d.	All of these are correct

78.

Pooling is a cooperative marketing method involving:

a.	Assembling products from many producers
b.	Combining sales returns and operating expenses, and distributing returns
c.	Both assembling products from many producers and combining sales returns and operating expenses, and distributing returns

79.

Advantages of commodity pools include:

a.	Spreads market risks	c.	Helps finance the cooperative
b.	Permits orderly marketing	d.	All of these are correct

80.

Marketing agreements:

a.	Allow growers to maintain maximum flexibility in decision making
b.	Transfer some decision making from individual growers to the cooperative
c.	Transfer some decision making from the cooperative to the individual growers.

81.

A cooperative association with a federated structure:

a.	Serves local and regional cooperative members
b.	Serves farmers directly
c.	Serves the federal government

82.

The effectiveness of bargaining associations depends on:

a.	Improved operating efficiency of member farms
b.	Ability to control large volumes of product
c.	Additional processing
d.	All of these are correct

83.

A marketing agreement is:

a.	A written contract between the cooperative and a member
b.	A contract with an advertising agency
c.	An oral agreement between members and outside buyers

84.

Per-unit capital retains are:

a.	An out-of-pocket, one-time expense
b.	A deduction based on volume of product marketed through the cooperative
c.	the amount of product members can market on their own

85.

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

86.

Bargaining cooperatives generally:

a.	Take the title and physical possession of member products
b.	Perform processing functions
c.	Do not take title or physical possession of member products

87.

“Mixed” cooperatives are characterized by:

a.	Handling many different types of products
b.	Providing both farm supply and marketing services
c.	Serving both member -farmers and member-cooperatives

88.

Universified cooperatives may be characterized by:

a.	Cost sharing among products
b.	More uniformity of patrons
c.	More practical uniform pricing practices
d.	All of these are correct

89.

Forward integration is:

a.	The extent to which cooperatives expand into new trade territories
b.	the extent to which cooperatives move products closer to the consumer
c.	The extent to which cooperatives engage in agricultural production

90.

Differential pricing means:

a.	Pricing different products differently
b.	Setting different prices in different trade areas
c.	Use of discounts and premiums

91.

The marketing technique used to create a unique image for a product called:

a.	Product differentiation	c.	Market segmentation
b.	Market differentiation	d.	Product segmentation

92.

Price maintenance is a policy designed to:

a.	Generate relatively large margins
b.	Maintain below-market prices
c.	Generate relatively small margins

93.

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

94.

The objectives of structural arrangements such as joint ventures,marketing agencies in-common, and holding companies include:

a.	To increase market power
b.	To gain market entry
c.	To gain efficiencies in operations
d.	All of these are correct

95.

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

96.

A key element of pooling is:

a.	Sales are handled on an individual account basis
b.	Risk-sharing
c.	Cash-at-delivery

97.

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

98.

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