AEC 305 Exam 1 Practice Questions Terms &
Lists
1. Name two specific reasons from course materials why study of agricultural markets is important.:
1. Every person in the world is affected every day by how well or poorly ag markets operate
2. the incomes of nearly half the world's population are determined principally by the prices
received for ag commodities
2. A is a group of buyers and sellers organized for the
purposes of exchanging goods and services.: Market
3. True or False. Agricultural marketing is basically about the processes and actors involved in
getting agricultural products from the farm to final con- sumers.: True.
4. Name and clearly explain how agricultural markets are different than most other markets.: 1.
Market Participation (everyone is an ag consumer)
2. Biological Impacts (Production lags, perishable goods, transportation issues)
3. Nature of Demand (demand elasticities for food tend to be low)
4. Market Structure (various ones apply: perfect and imperfect competition, monop- olistic
power)
5. Political influence (gov. subsidies are high and food security is part of national security)
5. Name seven major components of a typical agricultural marketing chain and give a good example
of typical actors at each stage.: 1. input suppliers (fertilizer, legal services)
2. farmers (may sell to processors or consumer)
3. processors (wheat into bread)
4. wholesalers (processors to retail outlets)
5. retailers (grocery, restaurant)
6. consumers (buyers)
7. broker/agents (networking for efficiency)
6. Wholesalers are a drain on the agricultural marketing chain because they don't play any important
roles but instead only drive up costs. Is this statement true or false? If false, explain two important
value-added services provided by wholesalers.: False 1) Organize and coordinate acquisition
activities among numerous producers 2) Sort, store, and distribute products to the next
marketing stage
7. Input suppliers describe only those firms that provide inputs to farmers like fertilizer, seeds, and
young animals. Is this statement true or false? If false, give two examples of inputs supplied to non-
farmers.: False (also for lawyers at the retail level, brokers, wholesalers and consumers)
, AEC 305 Exam 1 Practice Questions Terms &
Lists
8. Two agricultural economists debated about the marketing chain for cheese. Mr. Green said that the
marketing chain consisted of all seven of the major agricultural marketing sectors. Ms. Blue said it
included fewer sectors. Who is right? Mr. Green? Ms. Blue? Both? Neither? Explain your answer
clearly.: Both. It is not always one thing, can be multistage or the farmer can sell direct to the
consumer.
9. Write a one sentence justification for the following statement: "Agricultural marketing is complex.":
Agricultural marketing is challenging in meeting the needs of a growing consumer base not only
nationally but also globally, and adapting to changes in production and consumer preferences in
an already multistage process.
10.True or False. Farm value is the value of all farmland and permanent improvements upon
the land.: False.
11.Name two important ways to measure the importance of agricultural mar- keting quantitatively.:
1. 90% of developing nations workforce is farmers (contribu- tion to employement)
2. Ag accounts for gross domestic product of over 50% in developing nations
12.Farming and agricultural marketing accounts for approximately what per- cent of U.S. GDP?
a) 1% b) 6% c) 12% d) 33%: 1%
13.Consumer expenditures on food are the sum of what two major compo- nents?: Farm value
and marketing bill.
14.Farm-to-retail price spreads are estimated for individual commodities and small groups of
commodities.
Are farm-to-retail price spreads estimated for all foods combined? Why or why not?: No. Farm to
retail price spread is the marketing costs associated with individual food products or limited
groups of food products.
15.Since 1960, which of the following increased most as a
percent: aggregate annual national U.S. income, total annual U.S. food ex- penditures.: Aggregate
nominal income increased 3016%; Food expenditures in- creased 1982%.
16.What is the difference between the marketing bill and farm-to-retail price spreads?: Farm to
retail- isolating price difference for a single food item in different stages of marketing marketing
bill- Aggregate measure of marketing costs
17.Characterize changes in annual U.S. per capita consumption of major food commodities in recent
decades (see Table 1). Since 1980, what foods do U.S. consumers now
tend to buy more of? Less of?: Yougurt has the highest % change, whole milk one of the biggest
decreases. People are moving from high fat and moving to more natural food.
Lists
1. Name two specific reasons from course materials why study of agricultural markets is important.:
1. Every person in the world is affected every day by how well or poorly ag markets operate
2. the incomes of nearly half the world's population are determined principally by the prices
received for ag commodities
2. A is a group of buyers and sellers organized for the
purposes of exchanging goods and services.: Market
3. True or False. Agricultural marketing is basically about the processes and actors involved in
getting agricultural products from the farm to final con- sumers.: True.
4. Name and clearly explain how agricultural markets are different than most other markets.: 1.
Market Participation (everyone is an ag consumer)
2. Biological Impacts (Production lags, perishable goods, transportation issues)
3. Nature of Demand (demand elasticities for food tend to be low)
4. Market Structure (various ones apply: perfect and imperfect competition, monop- olistic
power)
5. Political influence (gov. subsidies are high and food security is part of national security)
5. Name seven major components of a typical agricultural marketing chain and give a good example
of typical actors at each stage.: 1. input suppliers (fertilizer, legal services)
2. farmers (may sell to processors or consumer)
3. processors (wheat into bread)
4. wholesalers (processors to retail outlets)
5. retailers (grocery, restaurant)
6. consumers (buyers)
7. broker/agents (networking for efficiency)
6. Wholesalers are a drain on the agricultural marketing chain because they don't play any important
roles but instead only drive up costs. Is this statement true or false? If false, explain two important
value-added services provided by wholesalers.: False 1) Organize and coordinate acquisition
activities among numerous producers 2) Sort, store, and distribute products to the next
marketing stage
7. Input suppliers describe only those firms that provide inputs to farmers like fertilizer, seeds, and
young animals. Is this statement true or false? If false, give two examples of inputs supplied to non-
farmers.: False (also for lawyers at the retail level, brokers, wholesalers and consumers)
, AEC 305 Exam 1 Practice Questions Terms &
Lists
8. Two agricultural economists debated about the marketing chain for cheese. Mr. Green said that the
marketing chain consisted of all seven of the major agricultural marketing sectors. Ms. Blue said it
included fewer sectors. Who is right? Mr. Green? Ms. Blue? Both? Neither? Explain your answer
clearly.: Both. It is not always one thing, can be multistage or the farmer can sell direct to the
consumer.
9. Write a one sentence justification for the following statement: "Agricultural marketing is complex.":
Agricultural marketing is challenging in meeting the needs of a growing consumer base not only
nationally but also globally, and adapting to changes in production and consumer preferences in
an already multistage process.
10.True or False. Farm value is the value of all farmland and permanent improvements upon
the land.: False.
11.Name two important ways to measure the importance of agricultural mar- keting quantitatively.:
1. 90% of developing nations workforce is farmers (contribu- tion to employement)
2. Ag accounts for gross domestic product of over 50% in developing nations
12.Farming and agricultural marketing accounts for approximately what per- cent of U.S. GDP?
a) 1% b) 6% c) 12% d) 33%: 1%
13.Consumer expenditures on food are the sum of what two major compo- nents?: Farm value
and marketing bill.
14.Farm-to-retail price spreads are estimated for individual commodities and small groups of
commodities.
Are farm-to-retail price spreads estimated for all foods combined? Why or why not?: No. Farm to
retail price spread is the marketing costs associated with individual food products or limited
groups of food products.
15.Since 1960, which of the following increased most as a
percent: aggregate annual national U.S. income, total annual U.S. food ex- penditures.: Aggregate
nominal income increased 3016%; Food expenditures in- creased 1982%.
16.What is the difference between the marketing bill and farm-to-retail price spreads?: Farm to
retail- isolating price difference for a single food item in different stages of marketing marketing
bill- Aggregate measure of marketing costs
17.Characterize changes in annual U.S. per capita consumption of major food commodities in recent
decades (see Table 1). Since 1980, what foods do U.S. consumers now
tend to buy more of? Less of?: Yougurt has the highest % change, whole milk one of the biggest
decreases. People are moving from high fat and moving to more natural food.
