Vocab

Diminishing marginal returns to a factor of production are most likely to occur when:

• One factor is increased and all others are fixed

• One factor is fixed and all others are increased in equal proportion

• All factors are increased in equal proportion

• One factor is decreased and all others are fixed

The increase in total cost associated with a one-unit increase in production is:

• Marginal cost

• Marginal physical product

• Marginal revenue

• Marginal utility

The opportunity cost of an investment in new farm equipment is associated with:

• The amount of income that new equipment will generate

• The income that could have been obtained by using the investment expenditure in its next most profitable activity

• The lost opportunity to spend more money on clothes and vacations

• The increase in farm income generated by the new equipment minus the costs of operating it

Which of the following is a variable cost?

• Real estate taxes

• Payments on farm equipment loan

• Interest on long-term debt

• Fuel costs

If two inputs have a constant substitution ratio, the least-cost combination will:

• be in the same proportion as the price ratio

• be in the same proportion as the substitution ratio

• be in an exact 50–50 proportion

• generally be all of one input or all of the other

In general terms, efficiency refers to:

• The volume of resources utilized in the farm business

• The ratio of total liabilities to total assets in the business

• The net farm income generated by the farm business

• The volume of production generated per unit of resource utilized in the farm business

Supplementary enterprises are those where:

• The output of one can be increased only by reducing output of the other

• The output of both enterprises can be increased at the same time

• The output of one can be increased with no change in the output of the other

• Their substitution ratio is decreasing

The higher the price of strawberries, other things being equal, the quantity consumed:

• Will increase

• Will decrease

• Will not change

• Cannot be predicted from information given

When using cash accounting which of the following accounts would never be used?

• Grain sales

• Depreciation

• Fertilizer purchases

• Accounts payable

The money received from the sale of raised cull beef cows is what type of income?

• Ordinary

• Capital gains

• Accrual

• Estate