Multiple
Choice
Identify the letter of the choice that best completes the statement or answers the
question.
|
| 1. | Which of the following
statements is true about diminishing returns? a. | Diminishing returns are only found in the
short run | b. | Diminishing returns are only found in the long
run | c. | Diminishing returns set in after the point at which marginal product
is greatest | d. | All of these are true | e. | Both (Diminishing returns are only found in the short run) and (Diminishing returns
set in after the point at which marginal product is greatest) are true
| | |
|
| 2. | If a farm has a working capital
greater than $0, its current ratio will be: a. | Greater than one | b. | Equal to one | c. | Less than one | d. | There is no relationship between working capital and the current
ratio | | |
|
| 3. | Another name for the
discounting method is: a. | Future
value | b. | Present value | c. | Income value | d. | Purchase value | | | | | | | | |
|
| 4. | For IRS purposes, a farmer is
one who has what percentage of income coming from agricultural or horticultural
activities? a. | 33.333% | b. | 50.00% | c. | 66.67% | d. | 75.00% | | | | | | | | |
|
| 5. | In marginal analysis, the point
of diminishing returns occurs: a. | Where marginal revenue is less than
marginal cost | b. | Where marginal revenue is more than marginal
cost | c. | Where marginal revenue equals marginal cost | d. | There is no relationship between diminishing returns and marginal
analysis | | |
|
| 6. | By adding a feed mill to a
dairy cattle operation, a producer becomes more a. | Specialized | b. | Diversified | c. | Integrated | d. | Motivated | | | | | | | | |
|
| 7. | Cooperatives differ from other
corporations in which area? a. | No board of directors in a
coop | c. | No manager in a cooperative | b. | How voting is
done | d. | Cooperatives are not incorporated | | | | |
|
| 8. | When a farmer increases his
investment in land, buildings and equip,equipment without increasing the total units of production,
cost per unit: a. | Increase | c. | Decreases | b. | Remains the
same | d. | Varies with the operator | | | | |
|
| 9. | Farmer Joe earned $30,000 from
farming last year. His total assets are valued at $420,000. He has outstanding mortgages and loans of
$175,000. What rate of return did he earn on his equity? a. | 7.14 % | b. | 8.51 % | c. | 12.24 % | d. | 17.14 % | | | | | | | | |
|
| 10. | For maximum net returns, a
farmer should substitute machinery for labor when: a. | There is a limited supply of labor. | b. | Value of labor saved is more than annual machine cost | c. | The annual cost of machine use is equal to the cost of labor | d. | The additional machine will increase labor efficiency | | |
|
| 11. | On May 1, after surveying his
corn records, a farmer has determined that his total variable cost per acre will be approximately
$258. His fixed cost per acre is estimated at $70. Given a yield of 150 bushels per acre, what is his
break-even price per bushel? a. | $0.47 | b. | $1.25 | c. | $1.72 | d. | $2.19 | | | | | | | | |
|
| 12. | What is the annual opportunity
interest cost for a new feed grinder-mixer that costs $15,000 and has an expected salvage value of
$3,000 after 8 years? The interest rate is 10%. a. | $150 | b. | $600 | c. | $900 | d. | $1,500 | | | | | | | | |
|
| 13. | In the short
run, a. | Total fixed costs are zero when there is no production | b. | Total variable costs are zero when there is no production | c. | Total cost will remain constant as output increased | d. | Total cost will decrease as output is increased | | |
|
| 14. | On March 1, Jennifer borrowed
$10,000 to plant soybeans. On November 1, she repaid the $10,000 along with $505 interest. What
annual interest rate did she pay? a. | 5.050 % | b. | 7.575 % | c. | 8.657 % | d. | 10.607 % | | | | | | | | |
|
| 15. | The price at which consumers
are willing to buy all that the producers are willing to supply to the market is called
the: a. | Production Methods | c. | Support Price | b. | Equilibrium Price | d. | Risk-Free Market Place | | | | |
|
| 16. | A farmer and spouse file a
joint tax return. The farmer does not make estimated tax payments and off-farm income is less then
1/3 of total gross income. When must the 2002 tax returns be filed with full payment of taxes
due? a. | January 31, 2003 | c. | April 15, 2003 | b. | March 1, 2003 | d. | June 15, 2003 | | | | |
|
| 17. | The present value of $150 that
will be received at the end of 1 year, given a 5% interest (discount) rate is: a. | $95.24 | b. | $142.86 | c. | $155.00 | d. | $157.50 | | | | | | | | |
|
| 18. | A grain combine can be
purchased for $120,000. Total annual fixed costs will be $15,000 and variable costs per acre will be
$15. If a custom operator can be hired to combine grain for $35 per acre, what is the minimum number
of acres one should plan to harvest to justify buying the combine? a. | 750 | b. | 800 | c. | 1,000 | d. | 15,000 | | | | | | | | |
|
| 19. | The book value of a piece of
farm equipment would be the a. | Value that the item currently has on the
open market | b. | Cost of an item plus the total depreciation to
date | c. | Cost of the item minus depreciation | d. | Sentimental value of the item to the producer | | |
|
| 20. | If the U.S. wheat industry has
an inelastic demand curve, a reduction in the amount of wheat supplied to the market
would: a. | Have no effect on total revenues in the wheat
industry | b. | Increase the total revenues in the wheat
industry | c. | Decrease the total revenues in the wheat
industry | d. | Cause a sharp increase in the demand for
wheat | | |
|
| 21. | A contract which gives the
buyer the right, but not the obligation to assume a long (futures) position a specific price within a
specified period of time is a: a. | Strike
price | b. | Call option | c. | Put option | d. | Option price | | | | | | | | |
|
| 22. | The price at which the futures
market contract underlying a call or put option can be purchased (if a call) or sold (if a put) is
a: a. | Strike price | b. | Call option | c. | Put option | d. | Option price | | | | | | | | |
|
| 23. | In the bear market we would
expect: a. | Prices to fall | c. | Corporate
mergers | b. | Prices to rise | d. | Large price
fluctuation | | | | |
|
| 24. | A limited
partnership is one in which: a. | Some partners do not participate in
management, and have limited liability | b. | The maximum number of acres is fixed by
state law | c. | The number of partners may not exceed 75 | d. | Only one type of enterprise is carried out | | |
|
| 25. | If the demand curve for a
firm;s product is relatively inelastic, its total revenue can be increased by: a. | Increasing price | c. | Increasing quantity supplied | b. | Decreasing price | d. | All of these are correct | | | | |
|