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In Class Review Notes for Exam 1

by: Cassidie Cartwright

In Class Review Notes for Exam 1 AGR*204*001

Marketplace > Morehead State University > Agribusiness > AGR*204*001 > In Class Review Notes for Exam 1
Cassidie Cartwright
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About this Document

These notes will help prepare for the Ag Economics Exam 1.
Agricultural Economics
Dr. Vijay Subramaniam
Class Notes
Agriculture Economics




Popular in Agricultural Economics

Popular in Agribusiness

This 3 page Class Notes was uploaded by Cassidie Cartwright on Wednesday September 14, 2016. The Class Notes belongs to AGR*204*001 at Morehead State University taught by Dr. Vijay Subramaniam in Fall 2016. Since its upload, it has received 4 views. For similar materials see Agricultural Economics in Agribusiness at Morehead State University.


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Date Created: 09/14/16
Ag Economics Review 1. Clearly distinguish between demand and quantity demanded. Demand is a relationship between quantity & price—at different prices, different quantities will be demanded . The quantity demanded is a one­dimensional concept that refers to how much of a good or service a buyer is willing to purchase… – At a single, specified price. – In a given market.  – At a given time. – Certeris paribus. The law of demand states that, other things equal, when the price of a good  falls, the quantity demanded of the good rises. 2. Explain the different results of an own price change in a good and a price  change in a related good. An own price change will not affect the supply and demand curves. The  equilibrium will remain constant for sales. The market price does not change. A price change in a related good will change the supply and demand curves of  the complementary/substitute good. For example, if the price of hotdog buns  rises, less people will buy hotdog buns, resulting in a decrease in demand and  prices of hotdogs.  3. Differentiate between normal and inferior goods. When income increases and demand increases, the good is normal. When income increases and demand decreases, the good is inferior.  4. List all factors that would increase the demand for a good.  Prices of substitute goods  Prices of complementary goods  Consumers’ income increases  Tastes and preferences  Expectations  Demographics 5. Explain how changes in consumer expectations impact demand. When consumers expect a store to have a particular item in­stock and the item is out­of­stock, the demand for this item increases. 6. What factors shift the supply curve?  Prices of inputs   Technology  Taxes and subsidies  Expectations  Number of firms 7. Explain how changes in input prices impact supply. If input price goes down, the firm will supply more. If input price goes up, the firm will supply less. 8. Differentiate between individual demand and market demand. At a set price, each consumer buys a particular amount of an item. As the price of that item decreases, consumers will buy additional units of that  item. 9. What is the meant by the phrase “markets clearing quantity”? Everything supplied will be sold. Quantity demanded = Quantity supplied 10. What is the impact on the equilibrium when the demand increases and  supply decreases? Equilibrium quantity demanded will increase, and equilibrium price will  decrease. Agriculture Economics Quiz 1 Review 1. Ceteris paribus means everything else remains constant. 2. The market for beef in the U.S. is an example of allocation using the  price system.  3. The economic term used to describe the earnings forgone by attending  college is opportunity cost. 4. The cost of using a good for one purpose is equal to the value that good  could have earned in its best alternative use. This is the concept of  opportunity cost. 5. Economics is the science of allocation. 6. The study of the behavior of an individual firm is part of microeconomics. 7. The study of the changes in time, place, form, and possession that occur  as a good moves from the producer to the consumer is called marketing. 8. In the language of economics, marginal means additional. 9. Scarcity creates the need for an allocation system. Because of scarcity,  you make choices. 10. In the neoclassical model of markets, buyers are price takers and  sellers are price takers. 11. The concept of diminishing returns stipulates that eventually the  returns to an economic activity increase at a decreasing rate. 12. In the United States, higher education is an example of allocation  using a mixed system.


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