Sample/practice exam 2015, questions and answers + test 1 review PDF

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TEST 1 Review and Sample Questions with solutions...

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TEST 1 Review and Sample Questions with solutions SAMPLE QUESTIONS with Solutions Multiple Choice Examples 1. The inelasticity of demand for agricultural products can be explained by A. The parity ratio B. Economies of scale C. Rent-seeking behaviour D. Diminishing marginal utility 2. The demand for most farm commodities is: A. growing more rapidly than supply. B. inelastic. C. decreasing over time. D. a relatively flat downward sloping line. 3. If demand is inelastic and the price of the product decreases, producers’ incomes will: A. not change. B. increase. C. decrease. D. cannot say from given information. 4. In the production department at Frito-Lay, a sample of every product being produced is taken at fifteen-minute intervals to ensure that satisfactory taste and texture are maintained. This is an example of: A. planning. B. organizing. C. leading. D. controlling. 5. Which of the following is considered an agribusiness product? A. Corn grown for the USA market B. Soybeans to be exported C. Cotton D. All of the above. E. Both A and B

6. Seed and chemicals are considered as which type of agribusiness industries? A. Support B. Output C. Production D. Input E. None of the above 7. You must decide how to structure a work group so its work can be accomplished most efficiently. You have twelve people to deal with. You finally decide to make two of them team chiefs and assign the remaining ten to the two teams. What are you doing? A. Planning B. Organizing C. Leading D. Controlling 8. ___________ is a measure of how much is created relative to the resources used to create it. A. Quality B. Productivity C. Ethnicity D. Innovation 9. The process of determining which the best way to approach a particular goal is is called A. Planning B. Organizing C. Leading D. Controlling Answer the next three questions on the basis of the following graph for corn. (Appendix material)

10. Initially assuming that the supply curve is S1, what is the market price and the total income of corn growers? A. $3.50, $300 million. B. $3.50, 350 million. C. $3.00, $300 million.

D. cannot say from given information.

11. Now assuming that supply changes to S2, what will be the new price and total income of corn growers? A. $3.00, $330 million. B. $3.00, $300 million. C. $3.50, $385 million.

D. cannot say from given information.

12. On the basis of the changes in price and total income noted in the previous two questions, we can say that: A. the supply of corn is inelastic. B. the supply of corn is elastic. C. the demand for corn is inelastic. D. the demand for corn is elastic. 13. Before any planning can take place, an organization must establish its A. plan. B. premise. C. mission. D. goal. 14. You decide to go into business for yourself. On your loan application, you state that you intend to open a flower shop in Sunny Mall. What does this statement on your loan application represent? A. Mission B. Purpose C. Strategic plan D. Strategic goal 15. Income elasticity of a normal good such as milk A. Will have a negative value. B. Will have a positive value. C. May have a negative or positive value. D. Is not defined. 16. PESTEL stands for: A. Political, Economic, Social, Technological, Environmental, and Legal B. Political, Economic, Social, Technological, External, and Legal C. Political, Economic, Social, Technological, Environmental, and Live. D. Plan, Economic, Social, Technological, Environmental, and Legal

17. Which of the following is NOT one of the historically referred Four P's of Marketing? A. Proposition B. Product C. Price D. Place 18. A vision for a company is: A. an explanation of why the company exists and where it wants to go. B. the same thing as an objective. C. a detailed plan that outlines the major organizational structure of the firm. D. very relevant for the short-term, but less useful for the long-term. 19. _________ analysis is used to help companies evaluate their economic environments, assess their strengths and weaknesses, and identify competitive threats and market opportunities. A. WISH B. SWAMP C. ASSET D. SWOT 20. The bargaining power of the supplier is less than that of the buyer when A. volume of purchase is low. B. the buyer's profit margin is low. C. cost savings from the supplier's product are minimal. D. threat of backward integration by buyers is low. 21. The set of marketing tools that the firm uses to pursue its marketing objectives in the target market is called a(n): A. Customer mix B. Competitor mix C. Marketing mix D. All of the above are true 22. All of the following are part of Porter's five forces, except: A. Buyer power B. Threat of new entrants C. Consumer power D. Rivalry among existing competitors 23. If the buyers in a particular industry hold a lot of the power, the industry is less attractive to enter. Which of Porter's five forces does this statement reflect? A. Buyer power B. Threat of new entrants C. Supplier power D. Rivalry among existing competitors

24. It is December. The owners of Wilson Video Store know sales last year were $400,000 and that sales this year were $380,000. If they use the naive method of forecasting, what are predicted sales for next year? A. $361,000 B. $380,000 C. $400,000 D. $421,053 25. Compute a three year moving average forecast for year 5, given the following data: Year Sales 1 4 2 7 3 8 4 9 A. 6 B. 7 C. 8 D. 9 E. 10 26. “The process of analyzing, planning, implementing, coordinating, and controlling programs involving the conception, pricing, promotion, and distribution of products, services, and ideas designed to create and maintain beneficial exchanges with target markets for the purpose of achieving organizational objectives” is a definition of: A. marketing communications. B. marketing management. C. marketing strategy. D. strategic management 27. When PepsiCo attempts to define which products, promotions, prices, and distribution arrangements to include in its snacks food line, what type of strategy is it pursuing? A. Marketing strategy B. Functional-level strategy C. Corporate strategy D. Operational strategy 28. Advertising, personal selling, point-of-purchase displays, and publicity are related to which element of the marketing mix? A. Place B. Product C. Price D. Promotion

29. When a consumer purchases a product at a convenient location and when she is ready to use the product, we say that the product has achieved _________ utility and _________ utility, respectively. A. time; place B. place; time C. possession; place D. possession; functional 30.The law of demand states that, other things remaining the same, the higher the price of a good, the ________. A) smaller is the demand for the good. B) smaller is the quantity of the good demanded. C) larger is the quantity of the good demanded. D) larger is the demand for the good.

Sample Short Essay/Definition Questions with information on solutions NOTE: Most of the questions will be tested from the lecture slides and whatever we have touched in the class

1. Define agribusiness and differentiate it from other forms of business. Agribusiness involves the production, distribution, and consumption of food, clothing, and shelter.It includes all economic activity in the food and fiber system, which encompasses the input supply industries, agricultural production, and post-harvest value-added activities, such as commodity processing, food manufacturing, and food distribution. Agribusiness in its nascent form preceded business activities; however, though most functions in business occur in agribusiness, the key distinguishing characteristic is that agribusiness involves working with a perishable commodity. 2. What is the agribusiness value chain? The value chain links the production/harvesting of raw commodities with their transport to processing facilities, then through shipping and distribution, and ultimately to the retailer or the consumer. 3. What are the components industries of Agrifood system? Component industries of Agri-food system include: Input Suppliers Producers Commodity Processors Food Manufacturers Food Distributors

Food Retailers NOTE: please explain briefly each sectors if need to. 4. What are the advantages of Horizontal Integration? 1. Lowers the cost structure Creates increasing economies of scale Reduces the duplication of resources between two companies 2. Increases product differentiation Product bundling – broader range at single combined price Total solution – saving customers time and money Cross-selling – leveraging established customer relationships 3. Replicates the business model In new market segments within same industry 4. Reduces industry rivalry Eliminate excess capacity in an industry Easier to implement tacit price coordination among rivals 5. Increases bargaining power Increased market power over suppliers and buyers Gain greater control

5. What are the factors that effects productivity ?

6.. Explain briefly any five demand shifters Six important demand shifters can be identified: Prices of substitute goods—alternative goods that can satisfy a want. Prices of complementary goods—that are normally consumed together or jointly. Consumers’ income—demand for big-ticket (durable) goods is very sensitive to changes in consumers’ income. Tastes and preferences—which change over time, with implications for the demand for some goods Expectations—on a normal day, Florida supermarket shelves are filled with bottled water for sale, but two days before a hurricane, not a single bottle is found. Due to changed expectations, demand for bottled water shifted significantly outward. Demographics—the fastest growing segment of our population today is the age group over 90 years. 7. What are efficiency and effectiveness? Efficiency is operating so that resources are not wasted. Effectiveness is doing the right things in the right way at the right time. 8. What are the major functions of management? Briefly describe each. All managers perform four general functions, to varying degrees: planning and decision making, organizing, leading, and controlling. Planning and decision making involves determining the organization’s goals and deciding how best to achieve them. Organizing is the process of grouping activities and resources in a logical and appropriate fashion. Leading is the set of processes associated with guiding and directing employees toward goal attainment. Controlling is the process of monitoring and adjusting organizational activities toward goal attainment.

9. Explain briefly S.M.A.R.T principle and why it is important for Managers? Solution explained in class 10. Explain briefly Jean Kensey’s Model (Chapter 1) ? Solution in powerpoint slides and textbook page 8-9 (Chapter 1) 11. Explain briefly the four functions of Management?

12. Explain briefly the five barriers to consumer satisfaction?

13. Explain briefly the four utilities of marketing?

14. Explain briefly the Structure Conduct Performance Model in Marketing Solutions : Chapter 3 ppt slides 15. What is concentration Ratio? proportion of total sales in a market accounted for by the sales of the largest firms to measure market structure (most common ones are CR4 and CR8 ) 𝑖 = 𝑛𝑜. 𝑜𝑓 𝑡𝑜𝑝 𝑖 𝑓𝑖𝑟𝑚𝑠 𝑛

𝐶𝑅𝑖 = ∑ 𝑀𝑎𝑟𝑘𝑒𝑡 𝑆ℎ𝑎𝑟𝑒 𝑖 𝑖=1

16. What are the major parts of Marketing Plan?

17. Explain briefly the law of demand.

18. Explain briefly the four elements of a sustainable competitive advantage

19. Explain briefly Michael Porter’s five forces model that is used for industry analysis

20. Explain briefly three types of common budgets discussed in class. Solution: PPT Slides (Chapter 8)

Sample Quantitative questions (partial solutions are provided) 1. On the supply and demand graph for wheat shown below, show the effect of rapid technological

change in wheat production. What happens to market equilibrium price __________ and the quantity exchanged? _________________

2. Draw supply and demand curves for millet, drawing the demand curve to show a relatively inelastic demand. Then suppose that supply fluctuates from year to year due to changing weather. What is the effect demand inelasticity and supply fluctuations on the market price of millet? ____________________ Show this on your graph.

3. Duck Airlines charges all passengers the same $400 fare on one of its routes. The average flight carries 60 people in a plane with a capacity of 100. One-third of the flyers are business travelers, and two-thirds are leisure travelers. A bright, young economist tells the airline that it should engage in price discrimination. She estimates that if it increases the business fares by 10%, it will lose 5% of the business flyers, and if it reduces leisure fares by 10%, it will increase leisure traffic by 20%. Calculate the total revenue (price X quantity) of Duck under its current one-price plan and under price discrimination plan.

4. Compute the total revenue for each and determine if the good is elastic or inelastic. Good A Price $5

Quantity 15

Price $6

Quantity 10

Good B Price $5

Quantity 50

Price $6

Quantity 48

5. Compute the elasticity of demand. Q1= 4 Q2 = 5 P1= $3 P2 = $2.25 Answer to 4 and 5 Good A

Price goes up, revenue goes down – elastic

Price $5

Quanitity 15

Price $6

Quantity 10

Good B

Price goes up, revenue goes up – inelastic

Price $5

Quantity 50

Revenue = $250

Price $6

Quantity 48

Revenue = $288

Revenue = 75 Revenue = 60

5. Elasticity of demand / Own Price Elasticity Q1= 4 Q2 = 5 P1= $3 P2 = $2.25 .2222/-.2857143 = -.77 < - 1 Inelastic A 1% increase in price leads to a .77% decrease in quantity demanded. 6. Compute the cross price elasticity and determine if the goods are substitutes or complements. Try not to look at the answers until after you have tried to figure it out on your own first. Qx1 = 10

Qx2 = 11

Py1 = $1

Py2 = $1.05

7 If the cross-price elasticity of x and y is +0.5, then a 10 percent increase in the price of y will change the quantity demanded of x by ____.

Answers 6. The goods are substitutes. Qx1 = 10 Qx2 = 11 ΔQ = 1 Py1 = $1 Py2 = $1.05 ΔP = .05 Exy = (1/10.5) / (.05/1.025) Exy = .09523/ .04878 Exy = 1.95

7. The goods are complements. Exy = -.5 = %ΔQx / 10 Solve the equation by multiplying both sides by 10.

%ΔQx = -.5* 10 = -5 or -5 percent 8. Complete the demand schedule in Table below up to a price of 50. P

Qd

5

9000

10

8000

15

7000

20

6000

25

5000

30

4000

35

3000

40

2000

45

1000

50

0

9. Given the following supply schedule: P

Q (a)

2 4

0

10

6

8

10

20

30

40

Draw the supply curve.

(b) Using the average (midpoint) method calculate price elasticity of supply (i) between P = 2 and P = 4; (ii) between P = 8 and P = 10 (c)

Does the elasticity of the supply curve increase or decrease as P and Q increase? Why?

(d) What would be the answer to (c) if the supply curve had been a straight line but intersecting the horizontal axis to the right of the origin?

Answer (a) The supply curve will be an upward sloping straight line crossing the vertical axis where P = 2. (b) (i)

Using the formula Q/average Q  P/average P, gives: 10/5  2/3= 3

(ii)

10/35  2/9

= 1.29

(c) The elasticity of supply decreases as P and Q increase. It starts at infinity where the supply curve crosses the vertical axis (Q = 0 and thus P/Q = ). (d) No. At the point where it crossed the horizontal axis, the elasticity of supply would be zero (P = 0 and thus P/Q = 0). Thereafter, as P and Q increased, so would the elasticity of supply. 10.

1. Dalworth Company wants to forecast from May. a. Three-month simple moving average starting from May to Dec. Month Actual Sales Three-Month Simple (Thousands) Moving Average Forecast Jan. 20 Feb. 24 Mar. 27 Apr. 31 May 37 (24+27+31)/3 = 27.33 June 47 (27+31+37)/3 = 31.67 July 53 (31+37+47)/3 = 38.33 Aug. 62 (37+47+53)/3 = 45.67 Sept. 54 (47+53+62)/3 = 54.00 Oct. 36 (53+62+54)/3 = 56.33 Nov. 32 (62+54+36)/3 = 50.67 Dec. 29 (54+36+32)/3 = 40.67 2. Cash flow and operating budget question will be similar to the one discussed in the class....