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Introduction to agricultural economics

John B. Penson, Jr&Oral Capps, Jr.&C. Parr Rosson III&Richard T. Woodward

Chapter 2

The U.S. Food and Fiber Industry - all with Video Answers

Educators

Chapter Questions

01:53

Problem 1

Circle the correct answer.
The percentage of disposable income currently spent on food in the United States is
a. less than 5 .
b. between 5 and 10 .
c. between 10 and 15 .
d. between 15 and 20 .

Lauren Shelton
Lauren Shelton
Numerade Educator
01:11

Problem 2

Bill Toney, a hobby farmer from Virginia, has a net worth of $$\$ 16$$ million. He has assets of $$\$ 30$$ million and liabilities of $$\$ $$____ million.

Narayan Hari
Narayan Hari
Numerade Educator

Problem 3

The portion of food expenditures associated with the activities of firms beyond the farm gate is known as the ____

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Problem 4

Circle the correct answer.
Suppose that the index of prices received by farmers for 2015 was 0.97 and the base year of this index was 2000 . Then,
a. relative to 2015 , farm prices were $97 \%$ higher in 2000 .
b. relative to 2000 , farm prices were $3 \%$ lower in 2015.
c. relative to 2015 , farm prices were $3 \%$ lower in 2000.
d. relative to 2000 , farm prices were $97 \%$ higher in 2015 .

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Problem 5

Circle the correct answer.
Since World War II, there have been increases in productivity in the agricultural sector. This trend is due in part to
a. the substitution of capital and materials for labor.
b. increases in farm size.
c. the decline in the numbers of farms.
d. all of the above.

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02:13

Problem 6

List the five sectors of the food and fiber industry:
a.
b.
c.
d.
e.

rb
Rabia Bibi
Numerade Educator
00:56

Problem 7

The major component of the marketing bill for food is_____

Hast Aggarwal
Hast Aggarwal
Numerade Educator
02:20

Problem 8

On average, U.S. farmers get approximately_____ cents of the dollar spent for food.

Jennifer Stoner
Jennifer Stoner
Numerade Educator
03:00

Problem 9

If your nominal income for 2012 was $$\$ 75,000$$ and the consumer price index for 2012 was 2.5 , what was your real income for 2012 ?____

Natalie Britton
Natalie Britton
Numerade Educator
01:39

Problem 10

Develop the output indices of the Nouveau Cattle Slaughtering Plant (base year 2014).
$$
\begin{array}{|ccc|}
\hline \text { Year } & \begin{array}{c}
\text { Pounds of Cattle } \\
\text { Slaughtered }
\end{array} & \text { Output Index } \\
\hline 2013 & 180,000 & \\
2014 & 250,000 & \\
2015 & 200,000 & \\
\hline
\end{array}
$$

Erika Bustos
Erika Bustos
Numerade Educator

Problem 11

Which of the following is true? Circle all that apply.
a. Currently, the food and fiber sector accounts for about $12 \%$ to $15 \%$ of gross domestic product (GDP).
b. Off-farm income is important to agricultural producers today.
c. Twenty percent of farmers produce $80 \%$ of the agricultural output in the food and fiber industry.
d. The food and fiber industry is responsible for one out of every ten jobs.

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01:09

Problem 12

Today, the number of farms in the United States is roughly in the order of_____ million.

Victor Salazar
Victor Salazar
Numerade Educator
07:51

Problem 13

The following information pertains to a farm in the Rio Grande Valley.
TABLE CANT COPY
a. Net farm income for this operation is $$\$ $$____
b. The equity for this operation is $$\$ $$______

Rosina Dapaah
Rosina Dapaah
Numerade Educator
07:21

Problem 14

The output produced in bushels and the price of this output ($$\$ $$/bushel) for a farmer over the last 3 years are as follows:
$$
\begin{array}{ccccc}
\hline \text { Year } & \text { Output } & \text { Price (\$) } & \begin{array}{c}
\text { Consumer } \\
\text { Price Index }
\end{array} & \begin{array}{c}
\text { Production } \\
\text { Expenses (\$) }
\end{array} \\
\hline 2010 & 70,000 & 3.20 & 1.10 & 120,000 \\
2011 & 75,000 & 2.90 & 1.20 & 140,000 \\
2012 & 80,000 & 2.80 & 1.15 & 135,000 \\
\hline
\end{array}
$$
Let the base year be 2011:
a. For the year 2010 , what is the output index? Interpret this measure.
b. For the year 2012, what is the price index? Interpret this measure.
c. Assume that the only source of income for this farmer is from the production of this output. What is the best year in terms of real income for this farmer?

Jennifer Stoner
Jennifer Stoner
Numerade Educator
01:53

Problem 15

Suppose your nominal income in 1995 was $$\$ 24,000$$. Suppose, too, that the Consumer Price Index for 2012 was 2.5 and that the base year for this index was 1995. How much nominal income would you need in 2012 in order to match the spending power of your $$\$ 24,000$$ in 1995 ?

Monica Miller
Monica Miller
Numerade Educator
01:40

Problem 16

Verify the calculations associated with the output and price indices in Table 2-1.

Manik Pulyani
Manik Pulyani
Numerade Educator
01:40

Problem 17

Verify the calculations associated with real total food-away-from-home expenditures in Table 2-2.

Manik Pulyani
Manik Pulyani
Numerade Educator
02:00

Problem 18

The term real as opposed to nominal means that economists are making adjustments for____

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
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Problem 19

Assume that for John Paxton, a soybean producer from Iowa, the only source of farm income is from the production of soybeans. Paxton produced 100,000 bushels of soybeans in 2014, receiving $$\$ 8$$ per bushel. Assuming this producer had production expenses of $$\$ 300,000$$, and assuming the CPI for 2014 was 2.00 , his real farm income for 2014 was
a. $$\$ 250,000$$.
b. $$\$ 500,000$$.
c. $$\$ 800,000$$.
d. can't tell; insufficient information.
Use the table below to answer questions 20 and 21 dealing with the output and price of corn for 2013 and 2014.
$$
\begin{array}{|ccc|}
\hline \text { Year } & \begin{array}{c}
\text { Output } \\
\text { (in Bushels) }
\end{array} & \text { Price per Bushel } \\
\hline 2013 & 10,000 & \$ 4.00 \\
2014 & 12,000 & \$ 5.00 \\
\hline
\end{array}
$$

Rashmi Sinha
Rashmi Sinha
Numerade Educator
01:07

Problem 20

Relative to 2013, the price of corn for 2014 was
a. higher by $20 \%$.
b. lower by $25 \%$.
c. lower by $20 \%$.
d. higher by $25 \%$.

Lottie Adams
Lottie Adams
Numerade Educator
00:37

Problem 21

Which of the following statements is true? (Let 2013 be the base year.)
a. The output index for 2013 is less than 1 .
b. The output index for 2014 is 1.25 .
c. The output index for 2014 is 1.20 .
d. The output index for 2014 is 0.83 .

Zachary Mitchell
Zachary Mitchell
Numerade Educator