2019 LOUISIANA STATE FFA FARM BUSINESS MANAGEMENT

1. The relationship between quantity supplied and price is known as:

• a. Supply curve

• b. Demand curve

• c. Derived demand

• d. Direct marketing

2. Suppose that the supply curve shifts to the right. What is the most likely effect on price and quantity?

• a. Price will increase and quantity may change

• b. Price will decrease and quantity may decrease

• c. Price will decrease and quantity will increase

• d. Price will increase and quantity will increase

3. At a price of $15, Jim buys 3 Cd's per month. When is the most likely effect on price and quantity?

• a. Yes, John is correct

• b. No, John is NOT correct. Jim's demand has increased.

• c. No, Jon is NOT correct. Jim's quantity demanded has increased, but his demand has stayed the same.

• d. No, John is NOT correct. Jim's quantity demanded has decreased, but his demand has stayed the same.

4. If the percentage change in quantity demanded is equal to the percentage change in price, demand is:

• a. Inelastic

• b. Unit elastic

• c. Elastic

• d. Perfectly elastic

5. The fewer the number of substitutes for a good, the:

• a. Lower its income elasticity of demand

• b. Higher its income elasticity of demand

• c. Lower its price elasticity of demand

• d. Higher is price elasticity of demand

6. Which of the following is NOT an assumption of the theory of perfect competition?

• a. Each firm produces and sells a differentiated product

• b. There are many sellers and buyers, none of which is large in relation to the total sales or purchases.

• c. Buyers and sellers have all relevant information with respect to

• d. There is easy entry and exit

7. A monopoly may exit because:

• a. Government has refused to grant a public franchise

• b. The firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers

• c. One firm has the exclusive ownership of a secure resource

• d. Both A and B

8. The profit maximizing quantity of output is where

• a. Demand equals supply

• b. Average total cost is at a minimum

• c. Price equals average variable cost

• d. Marginal revenue equals marginal cost

9. Pete’s Burgers has fixed costs of $100. When Pete’s Burgers makes 500 hamburgers, their variable costs are $100. When Pete’s makes 600 hamburgers, their variable costs are $200. What is the average total cost when they are making 600 hamburgers and what is the marginal cost for the range between 500 and 600 hamburgers?

• ATC=$0.20 ; MC=$1.00

• ATC=$0.50 ; MC=$1.00

• ATC=$0.40 ; MC=$1.00

• ATC=$0.50 ; MC=$2.00

10. Grocery stores do not often advertise sales prices on table salt because:

• a. The demand for salt is elastic

• b. The demand for salt is unit elastic

• c. The demand for salt is inelastic

• d. The demand for salt is negative