INTRO TO AG ECON
INTRO TO AG ECON ARE 012
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EQUATIONS YOU MAY NEED FOR EXAM III Depreciation Purchase price salvage value years of useful life Average Value Purchase price salvage value 2 Marginal revenue change in total revenue change in control variable Marginal cost change in total cost change in control variable Slope change in Y change in X Percent change in Qd Q1 Q0 Q0 X 100 Percent change in P P1 P0 P0 X 100 Ed percent change in Qd percent change in P Ed change in Qd change in P P0 Q0 Percent change in P percent change in Qd Ed Percent change in Qd percent change in P Ed Percent change in TR l lEdl X percent change in price E1 Percent change in Qd percent change in Id Es Percent change in Q3 percent change in P Average Relative Pricei Nominal PriceiCPli X 100 Where i year in 198284 dollars EXPLANATION OF TERMINOLOGY USED Graph accurately scaled precisely plotted accurately drawn to scale and labeled Rough sketch or illustrate not scaled or precisely plotted but completely labeled EXAM 3 ARE 012 FALL 1994 Answer the five 5 questions below Do all parts of each question Use a separate sheet of paper to answer each number questions and arrange your answers in numerical order when nished with the exam Write the number of each question and your name on the top of each sheet of paper you use You must show all work to receive full credit The price of all parts of each question is provided in the left hand margin so that you may make an informed management decision regarding the production ofthis exam DO NOT write answers on the test sheets Be thorough and complete in ALL your responses RETURN THE TEST SHEET H No test sheet F for the exam Please read and sign the Honor Pledge that follows I have neither given or received unauthorized aid on this exam Student s Signature 20 1 List the determinants of DEMAND INDICATE which determinants cause a parallel shift of the demand curve which determinants affect the slope of the demand curve and which do neither Do this quickly ifthey don39t come to you quick MOVE ON Don39t waste time staring in space 10 2 Using any commodity as an example you wish illustrate a persistent SHORTAGE by using a rough sketch Label your axis all prices and quantities and the curves you draw Does not need to be drawn to scale 5 a What must a government do to create a persistent SHORTAGE 5 b What price action should the government take to eliminate the SHORTAGE 3 In 1980 the average nominal price of gasoline was 125 per gallon At this price 719 billion gallons of gasoline were consumed in the US that year In 1988 the average nominal price of gasoline was 95 per gallon At this price 710 billion gallons of gasoline were consumed in the US CPIlgso CPIlgss 10 a Calculate the 1980 average relative price of gasoline and the 1988 average relative price of gasoline 10 b Graphically illustrate what happened in the market over this time period 10 4 Sketch a demand curve and label the three sections of elasticity Directly below this demand curve sketch THE APPROPRIATE total revenue curve REMEMBER TO LABEL THE AXIS OF EACH GRAPH AND ALL CURVES I 5 a If total revenue increases when price is increased in which section of the demand curve is the commodity currently priced 5 b Iftotal revenue decreases when price is increased in which section ofthe demand curve is the commodity currently priced 5 In 1989 the Division of Motor Vehicles of NO increased the fee charged for personalized tags from 30 to 40 The increased fee was to pay for a new program planting wild owers along our highways However the total revenue received by the state from the sale of personalized tags decreased and the wild ower program was scaled back CPIlgss CPIlgsg 10 a Why did total revenue from the sale of personalized tags fall 10 b What price action ceteris paribus should DMV have taken in 1989 to increase total revenue from the sale of personalized tags BONUS QUESTIONS Each bonus question below is worth ten 10 points 5 1 Illustrate explain in detail why a producer with pricing power would normally want to price his product or service in the elastic portion ofa negatively sloped demand curve 5 a Provide a written explanation of a strategic marketing example that is an exception to this rule 5 2 In the past when the annual wheat harvest has decreased by 10 percent wheat prices have increased 20 percent What is the price elasticity of demand for wheat based on this historical relationship 5 a Using the price elasticity computed above how much will the quantity of wheat raise 5 5 6 2 2 purchased by consumers decrease if the government uses a price oor to the price of wheat by 40 percent 3 Determine the income elasticity of demand given the information below SHOW ALL YOUR WORK W a 10 48000 11 144000 Q0 100 Q1 40 b What commodity classi cation is illustrated here 4 List the determinants of a relatively inelastic demand curve a Provide a written interpretation of the following price elasticity of demand estimate Ed50 b Is the above elasticity of demand estimate elastic or inelastic EQUATIONS YOU MAY NEED FOR THIS EXAM Depreciation Purchase price salvage value years of useful life Average Value Purchase price salvage value 2 Slope change in Y change in X or change in P change in Qd Percent change in Qd Q1 Q0 Q0 X 100 Percent change in P P1 P0 P0 X 100 Marginal revenue change in total revenue change in control variable Marginal cost change in total cost change in control variable EXPLANATION OF TERMINOLOGY USED Graph accurately scaled precisely plotted accurately drawn to scale and labeled Rough sketch or illustrate not scaled or precisely plotted but completely labeled Exam 2 ARE 012 Fall 1994 Answer the five 5 questions below Do all parts of each question Use a separate sheet of paper to answer each number questions and arrange your answers in numerical order when nished with the exam Write the number of each question and your name on the top of each sheet of paper you use You must show all work to receive full credit The price of all parts of each question is provided so that you may make an informed management decision regarding the production ofthis exam DO NOT write answers on the test sheets except for the table in Question 5 Be thorough and complete in ALL your responses RETURN THE TEST SHEET 1 No test sheet F for the exam Please read and sign the Honor Pledge that follows I have neither given or received unauthorized aid on this exam Student 5 Signature 1 You have just purchased a new halfton pickup truck for 14522 including all sales taxes You expect to drive the truck 15000 miles each year You plan to drive the truck 8 years then sell it for 3661 Auto insurance will cost you 500 per year for liability Collision with 500 deductible and comprehensive with no deductible will cost you 20 per 1000 of coverage The property tax rate in your city and county is 100 per 100 of value You paid cash for your new truck but you had to withdraw the money from your money market account currently paying 45 percent interest Tags will cost you 2650 per year Annual inspections will cost you 1950 per year Organize and neatly SHOW ALL WORK and answers For this truck please calculate or record the following annual ownership costs Depreciation Interest Property taxes Insurance This one is tricky so here is a hint 500 liability the usual insurance calculation Tags Inspection fee and Total Annual Ownership Cost 10 points a Total annual operating cost for this vehicle gas oil and grease tires general maintenance is 1075 per year Please calculate total ownership and operating cost per MILE 10 points 2 In 1973 I was 16 years old and the price ofa gallon of regular gasoline was 48 Today I can purchase a gallon of regular gasoline for 105 In ation over this time period was 225 percent Calculate the percentage change in the price of gasoline from 1973 to 1994 SHOW ALL OF YOUR WORK 1 a What has happened to the quotrealquot price of gasoline since 1973 5 points Fquot In 1973 I regularly worked for 75 per hour cash offthe books How many hours did I have to work to buy one gallon of gasoline at the 48 price 5 points Assume you can earn 600 per hour cash off the books today How many hours must you work 0 buy a gallon of gasoline at today s price of 105 5 points d How many more hours did I have to work in order to earn enough money to buy a gallon of gasoline Is gas less expensive today relative to my youthful days as measured by hours of work 5 points 3 Accurately graph the following demand schedule for 7 to 8 ft Red Sunset maple trees for the Three Stooges Garden Center during the Fall planting season GRAPH TO SCALE AND LABEL 10 points Price Quantity demanded per month 36 5 28 25 24 35 20 45 12 65 8 75 a Calculate the slope ofthis demand curve SHOW THE EQUATION AND ALL OF YOUR WORK I 8 points b What type of relationship between price and quantity demanded is illustrated here 2 points 4 Given the production possibilities schedule below what is the opportunity cost of increasing the value of Ag Commodities from 0 to 500 Billion Below Bbillion 5 points value ong Commodities 0B 100B 200B 300B 400B 500B value ofNonAg Commodities 480B 456B 384B 288B l68B 24B a Calculate the opportunity cost of increasing the value of Ag Commodities 5 points From 0 to 100B From 100B to 200B From 200B to 300B From 300B to 400B From 400B to 500B b What economic law do your answers in a above demonstrate 5 points c Explain the basic reason why the economic law you identified in b above exists as we move along a downward sloping bowed out production possibilities curve 5 points 5 TO SAVE TIME YOU MAY FILL IN THE TABLE BELOW You are going into the shotgun shell reloading business You are trying to determine how many employees to hire to work the loading machine at a wage rate of 600 per hour Therefore the control variable is the number of employees Components shell casing primer wads shot and powder will cost 200 per box There are no fixed costs overhead You can sell every box of shells you reload for 400 per box You get five friends to come over just before dove season to load some shells and help you with some economic research After some initial training on the reloading machine you first let one friend reload for an hour and count the number of shells loaded Then you let two friends reload for an hour and so on until all five friends are working at the reloading machine each having a specific task to perform The results are on the next page Change in Quantity of Boxes Control loaded Total Marginal Total Marginal Employees Variable per hour Revenue Revenue Cost Cost 1 15 777 36 2 iii 35 iii iii 82 77 3 iii 51 iii iii 120 77 4 iii 55 iii iii 134 77 5 iii 57 iii 144 77 You must have correct answers in the table above to get credit for ab and c below In other words guessing won39t cut it a Using marginal analysis how many employees should you hire to maximize profits 10 points b Suppose you hire the profit maximizing number of employees and begin production A high school student from down the road comes to you and asks for ajob after school Heshe is a fine young person and you want to help himher out What is the maximum wage rate per hour you could pay this student and not diminish your profits from the current level This is tricky THINK 5 points c Aside from the fact that you will feel good because you are helping a young person out why else would hiring this young person be of any benefit to you This is tricky too so THINK 5 points BONUS QUESTIONS 1 Illustrated below is a student s PPC for Hours of Leisure and Hours of Academic Investment Provide an illustration of a PPC for the value of Basic Wants and value of All Other Wants on your answer sheet If the student were to allocate hisher time resources at POINT A of the PPC what probable affect will the hours of leisure and academic investment at this point have on the long run economic growth of this student 10 points Hours of Academic Investment Hours of Leisure 2 Lately American and Japanese made automobiles have been getting bigger with more powerful higher performance engines Consumers have not been as concerned with the fuel efficiency aka physical efficiency of their autos lately either Why has this occurred Before you answer figure out what happened to the economic efficiency of an automobile getting 15 miles per gallon between 1973 and 1994 as a result ofthe change in the real price of gasoline 10 points On your answer sheet set up two equations for economic efficiency as follows 15 miles 100 per mile EE 1973 X 1 gallon gas price of gas in 1973 15 miles 100 per mile EB 1994 X 1 gallon gas What did the real price of gas do from 1973 to 1994 Now answer the question I have asked ARE 012 Problem Set for Final Exam Question 1 You manage a retail garden center You have purchased 1000 azalea plants in 1 gallon containers for 150 each wholesale delivered The prevailing retail price equilibrium price in your market area is 329 each You price your azaleas at 329 and sell 225 in the first week The second week you discount the azaleas 10 percent and sell 240 azaleas a What was total revenue during the first week of sales and the second week of sales TR1 TR2 b Did the price decrease cause total revenue to increase or decrease in the second week of sales c Which section of the demand curve are your azaleas priced in d Assume there is a four week marketing window in you area for azaleas Therefore this particular commodity has quotseasonal demandquot Since you ordered 1000 you will need to average 250 azaleas sold per week to sell all you have purchased To date you have moved 465 units of product and you have two weeks to move the additional 535 units If your objective is to not have any 1 gallon azaleas remaining at the end of the season you are going to have to lower price again You lower the price another 10 percent to 266 for the third week of sales You sell 252 azaleas in the third week You have 283 azaleas to sell in the fourth week In desperation you lower the price an additional 30 percent for the fourth week 186 At the end of the fourth week you have sold all the azaleas you purchased i Please calculate the total revenue for the third and fourth week of sales TR3 TR4 ii Please calculate the NET revenue from selling the 1000 azaleas over the four week period Use only the cost of the azaleas purchased to make this calculation Net revenue e Please calculate the price elasticity of demand for each price change Week 1 Week 2 Week 3 Week 4 f What did the price elasticity of demand do each time you lowered price g What did total revenue do each time you lowered price Question 2 Now let us start over with our primary objective being to maximize pro ts from our azalea sales Let s initially price our azaleas at 500 This is above the prevailing market price At the end of the first week we have sold 100 azaleas Not a stellar performance is it Let s lower the price 10 percent to 450 for the second week Sales increased to 150 units for the week a 50 percent increase You have 750 azaleas remaining Let39s lower the price another 10 percent to 405 Sales in the third week pick up to 210 azaleas for the week Let39s cut the price an additional 20 to 324 Sales for the fourth week increase 40 percent to 294 azaleas At the end of the selling season you have 246 1 gallon azaleas le a Calculate the total revenue for each week AND the total revenue for the selling season b Please calculate the NET revenue from selling these 754 azaleas based on the initial cost of the 1000 azaleas c Is the net revenue from this pricing strategy greater than the strategy used in question 2 d Please calculate the price elasticity of demand for each of the price changes e What did the price elasticity of demand do as you lowered price f What did total revenue do each time you lowered price The following questions are to get you to think about the next steps in this management process What can you do with the quotsurplusquot azaleas What will you do next year Don39t say order less that is just too easy although that is an alternative Look at the price elasticities Had your price decreases reached the unitary elastic point yet Is there room for further price decreases next year Should your starting price at the beginning of the season next year be set a little lower THINK Of course the above assumes ceteris paribus conditions over the following year Is that realistic What will you have to do over the course of the next year Will you need to determine if the population in your market area increased Have any new housing developments commercial offices or high density housing projects been completed over the year Is the general economy over the course of the year weakening or strengthening Is your market area dependent upon manufacturing employment professional service employment government employment what What about next year39s supply of azaleas Any weather problems pest problems pro tability problems for wholesale producers Let s take a look at what Cabela s Catalog does Bass Pro does this also When items are rst presented to consumers Cabela s places them in their primary catalog A er a few months usually when quotseasonal demandquot has abated these same items are removed from the primary catalog and placed in the Sale Catalog at much reduced prices Within a couple of weeks customers will receive the quotUltimate Sale Catalogquot with the same items in it as the Sale Catalog if not yet sold out The prices in the Ultimate Sale Catalog are slashed even more Thinking of a demand curve and your knowledge of price elasticity can you explain this pro t maximizing behavior Is it the same thing our garden center owner was doing Well I39ll be people really use this stuff Question 3 FOLLOW DIRECTIONS This problem illustrates how in ation combined with our former tax code increased the real tax rate on pro ts over time At the beginning of the year the ABC Corporation purchases a 100000 machine The machine has a use ll life of ve years and no salvage value Therefore ABC Corp may deduct from revenues one h of the cost of the machine each year as depreciation The following table illustrates ABC Corp pro ts at the end of the lth year ASSUMING NO INFLATION Sales 40000 less Variable Costs 10000 less Depreciation 20000 Pro ts 10000 less Taxes 50 5000 A erTax Pro ts 5000 Now suppose there IS INFLATION such that all prices double including the replacement cost of the machine sales and variable costs BUT the government the IRS allows depreciation to be written off at only historical cost 20000 per year a What is the new pro t statement at the end of the lth year for tax purposes b Construct another pro t statement for the end of the lth year identical to a above Erase the depreciation gure of 20000 and replace it with a depreciation gure of 40000 This 40000 is quoteconomic depreciationquot because the replacement cost of the machine has doubled to 200000 due to in ation Now erase the Pro t gure and recalculate Pro t using economic depreciation The IRS does not recognize economic depreciation and you shall see why in a second Leaving the tax gure the same calculate A erTax Pro ts FOLLOW THE DIRECTIONS TO THE LETTER c What is the quoteffectivequot tax rate on pro ts in the lth year with in ation accounted for d In 1979 economists estimated that the high in ation rate in that year raised the effective tax rate on corporate pro ts to as high as 95 Was there any incentive for America39s corporations to expand or increase productivity WHY e If you were President of the United States how would you have alleviated this problem Hint History holds the answer Common Sense will get it too THINK Question 4 You are president of the American Nursery Association a professional organization consisting of America s leading nursery producers You have been asked to predict how the sales of American horticultural products will do next year as a percentage change from this year39s sales The following information has been provided by an economic data service 1 The price elasticity of demand for American hort products is 25 2 The income elasticity of demand for American hort products is 30 3 The crossprice elasticity of demand with foreign hort products is 40 4 American hort products will increase in real price by 5 5 Foreign hort products will increase in real price by 7 6 American s real disposable income will increase 3 a Calculate each effect on percentage change in quantity demanded as a result of 4 5 and 6 above Add the effects together paying careful attention to the quotsignquot of each effect to calculate the NET percentage change in quantity demanded b Calculate the percentage change in Total Revenue The percentage change in total revenue equals the percentage change in quantity demanded plus the percentage change in the price of American horticultural products Question 5 You may do this problem on a computer using Microso Excel if you wish COST OF PRODUCING HOT DOGS TOTAL TOTAL AVERAGE AVERAGE AVERAGE TOTAL DAILY FIXED VARIABLE TOTAL FIXED VARIABLE TOTAL MARGINAL MARGINAL NET OUTPUT COST COST COST COST COST COST COST REVENUE REVENUE 0 50 0 100 50 40 200 50 55 300 50 65 400 50 90 500 50 165 600 50 365 ASSUME Hot dogs sell for 75 each The hot dog vendor is a quotprice takerquot Output and xed cost are on a daily basis for a small hot dog stand in down town Raleigh a Compute Total cost average xed cost average variable cost average total cost marginal cost marginal revenue and total net revenue in the table above b On GRAPH PAPER put output per day on the horizontal axis the costs listed AND total revenue on the vertical axis Plot total xed cost total variable cost total cost and total revenue Plot all these on one graph c On another piece of GRAPH PAPER plot average xed cost average variable cost average total cost marginal cost and marginal revenue Plot all these on one graph d On another piece of GRAPH PAPER plot total revenue and total cost together on one graph At what output level is Pro t TNR at a maximum e On another piece of GRAPH PAPER plot total net revenue I At what output level is total net revenue at a maximum What relationship exists between marginal cost and marginal revenue when total net revenue is at a maximum Question 6 A local landscaper is trying to decide if he should lease or purchase a tractor loader He estimates that he will use the tractor loader 200 hours per year The current lease rate is 30 per operating hour A used tractorloader in good condition is available for 8000 The tractorloader is estimated to last for 5 years with a 2000 salvage value Property taxes are 1 per 100 of assessed value Casualty insurance costs 30 per 1000 of coverage The current interest rate is 10 percent Fuel and oil cost are estimated to run 325 per hour You must provide lel and oil for the leased tractor Repairs and maintenance costs are estimated to run 3 per hour The leasing agent is responsible for repairs of the leased tractor Annual Ownership Costs Calculate the following a Depreciation b Property taxes c Insurance d Interest Operating Costs per hour a Fuel and oil b Repairs and Maintenance Breakeven Formula Hours of use Total annual ownership costs required to breakeven if Lease costhour operating costhour purchasedl Which method of input control should he choose purchase and own or lease Why NOTE Lease costhour includes the lease rate AND any operating costs you are responsible for under the lease agreement operating costhour includes any operating costs you are responsible for if you purchase the machinery or equipment Question 7 a Using the total annual ownership costs and operating costs per hour calculated in question 6 above calculate the total cost of owning and operating the tractor loader per hour of use Refer to your class notes pages 266 and 267 Hours Ownership Operating Cost Total Cost of Owning Used Cost per Hour per Hour and Operating per Hour 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 NOTE Ownership Cost per Hour Total Annual Ownership Cost quotquotquotquotquot 32L Understand that this is the equivalent of Average Fixed Cost AFC Operating Cost per Hour is equivalent to Average Variable Cost AVC Total Cost of owning and operating per hour is equivalent to Average Total Cost ATC Please realize that Question 6 can be answered mathematically using the breakeven formula OR graphically as you will do here for Question 7 b On GRAPH PAPER put hours used from the table above on the horizontal axis and total cost of owning and operating the tractorloader per hour ATC on the vertical axis Plot total cost of owning and operating the tractorloader per hour At 3325 per hour on the vertical axis draw a straight line parallel to the horizontal axis and extending slightly past the intersection with the downward sloping total cost of owning and operating per hour curve ATC curve Label this straight line quotthe lease ratehourquot At the point of intersection draw a straight line straight down parallel to the vertical axis and perpendicular to the horizontal axis How many hours of use are required for the landscaper to quotBreakevenquot on the purchase decision The answer should be the same one you calculated in Question 6 If not you have messed up somewhere Question 8 You are the manager of a lawn care company and it is time to consider purchasing fertilizer for your fertility program To keep things simple you are limited to two alternatives Fertilizer quotAquot is a 1064 water soluble nitrogen product and will provide a lush green lawn for 21 days Cost is 400 per 501b bag To get this price you must pick it up at the warehouse Fertilizer quotBquot is a 3257 sul lr coated urea slow release nitrogen product and will provide a lush green lawn for 84 days Cost is 1550 per 501b bag To get this price you must pick it up at the warehouse Of course in the quotreal worldquot you have many many more alternative fertilizer products from which to choose In a moment you will see how helpful a personal computer could be in evaluating the fertilizer alternatives you would be faced with in the quotreal worldquot The three numbers describing the fertilizer formulation indicate the percentage of each of the three plant macro nutrients nitrogen N phosphorus P and potassium K by weight contained in the bag The numbers are always in the order of NPK a Determine the cost per pound of nitrogen for each fertilizer alternative Which fertilizer is the better buy based on the cost per pound of nitrogen b You determine that you will have 100 acres of turf to fertilize The turf will require 1 pound of actual nitrogen per 1000 square feet There are 43560 sq per acre How many BAGS ofEACH fertilizer alternative would be required to meet your needs NEED SOME HELP Fertilizer A 1064 is 10 N therefore you will have to apply Step 1 1 lb N1000 sq lbs ofquotFertilizer Aquot 1000 sq Step 2 100 ac X 43560 sq ac X lbs ofquotFertilizer Aquot 1000 sq lbs of Fertilizer A 1000 sq it required Step 3 lbs of quotFertilizer Aquot required 7 bags required 50 lbs per bag Now you do the calculations for quotFertilizer Bquot c Your truck can only haul 10000 lbs of fertilizer per load How many truck loads of each of the fertilizer alternatives are required It will require two hours per round trip This includes travel time and lo adunload time 10 d Remember each bag will have to be opened by one of your hourly employees and poured into a fertilizer hopper The lawns you care for average 5 acres Your fertilizer spreader can handle 50 pounds of fertilizer per ll First how many bags of each fertilizer alternative will be required per 12 acre lawn Second how many times will the employee have to ll the fertilizer hopper for each fertilizer alternative Time is money e Your customers have chosen your service to keep their lawns looking lush green and healthy Based only on the price per bag of each fertilizer alternative what is the cost per pound of nitrogen for 1000 sq of green lawn per day cost per N1000 sq day for each fertilizer alternative You can gure this one out OK Taking all of the above information into account which fertilizer alternative is the better buy The following questions are asked only to stimulate further thought 01 Now What about spreader calibration Research shows that fertilizer application rates can be off by plus minus 20 percent from the intended rate due to the diiTerences between operators humidity which affects product ow through the spreader and individual spreader diiTerences among the same make and models If the spreader is throwing 20 percent more fertilizer than needed how much are you actually paying per 50 lb bag of fertilizer applied at 1550 per bag 1550 X 120 Now I ask you is it a good idea to assign a spreader to one employee that will carefully calibrate that spreader and understands the importance of proper calibration Is that employee worth more than 515 per hour Question 9 You must determine at what weight our producer should market his hogs The weight of a hog is determined by how much you feed him Therefore this is a marginal analysis problem to determine the pro t maximizing use of an input feed Therefore use pounds of feed as the control variable for this marginal analysis problem Assume the price of feed is 06 per pound This is the marginal cost of feed also Lbs Of Feed 400 500 600 700 800 Total Weight Of Hog 185 210 230 247 262 Total Revenue per Hog Change in Marginal Total Revenue Revenue a Complete the table above by calculating total revenue per hog change in total revenue per hog and marginal revenue per hog Assume the price of finished hogs is 40 per lb b At what weight should the producer market each hog Find the weight in which marginal revenue per hog is just equal to the marginal cost of feed c EACH feeder pig will cost you 3150 per head You have determined the market weight at which to sell your hogs Now determine your return PER HOG in excess of feed and feeder pig cost Total revenue per hog Feed cost Feeder pig cost Return per market hog per lb X per 1b x 71m 7 lbs feed d What is the MOST you could pay for a feeder pig and breakeven considering only feed and feeder pig cost HINT What does the feeder pig cost need to be in order for Return per market hog to equal zero e Assume that shortly AFTER purchasing feeder pigs the bottom falls out of the hog market and the expected market hog price drops to 3000 per cwt At what weight should the producer now plan to market his finished hogs HINT RECALCULATE the total revenue change in total revenue and marginal revenue in the table above and make your decision OH wouldn39t a personal computer with a spreadsheet package be real nice right about now f At a finished hog price of 3000 per cwt and a feeder pig price of 3 150 per pig what would be the producer s return per finished hog HINT Make the same type of calculations you did in part c above Question 10 Below is the market that faces Ogburn Landscape Services Ogbum Landscape Services concentrates its marketing efforts in Raleigh and Cary North Carolina Many other landscape service firms are operating in these markets and demonstrate service of equal quality to that of Ogbum Landscape Always start at GO Read the statements below the graph and determine the new equilibrium point This is an exercise concerning the determinants of demand and supply S2 D1 207 W7 d There is an increase in the population of potential consumers in both Raleigh and Cary due to economic growth State and Federal government agencies employ a large percentage of the market Ogbum Landscape Services deals with Salaries for State and Federal employees will be decreased 10 percent tomorrow due to the voter s desire to trim government Ogbum Landscape Services is accused of low quality workmanship use of stressed and diseased plants and billing people for work not contracted to be performed This accusation by the quotParade of Homesquot appeared inthe News and Observer Three Stooges Landscapes Inc a competitor of Ogbum Landscape Services announce in a full page news paper advertisement that they are cutting their contract rates by 20 across the board The government announces that the quotminimum wagequot will increase from 515 per hour to 550 per hour Ogbum Landscape s labor force consists of 50 minimum wage labor Landscape Supply Company a major input supplier to landscape service firms in this area announces they intend to increase the real price of their products an average of 15 percent due to an increase in demand by landscape service companies for their products Question 11 The NCSU University Club formerly known as the Faculty Club increased the monthly dues charged members from 45 in 1992 to 51 for 1993 The financial position of the University Club had been deteriorating for some time the increased dues were supposed to increase the total revenue of the Club enhance the Club s financial position and help finance some Club improvements Improvements to the Club were begun based on the Club Of cers assumption that more revenues would be available from the increase in monthly dues However the total revenue received by the Faculty Club from monthly dues decreased and the Club s financial position became severe CP11992 1403 CP11993 1442 a Calculate the relative price of faculty club dues in 1992 and 1993 Calculate the percentage change in the relative price of faculty club dues b Why did total revenue from Faculty Club dues decrease c What price action ceteris paribus should the Faculty Club have taken in 1993 to increase total revenue from Club dues Question 12 In 1922 an Associate Degree Program was started at NCSU in Agriculture entitled TwoYear Course in Practical Agriculture The following was the nominal cost per SCHOOL YEAR to attend the program Tuition 4500 Room rent fuel lights 4000 Board in College 15300 Fees approximately 2000 Breakage and military equipment deposit 2000 Total 27800 a The CPI index 1982 84 for 1922 is 168 What was the relative price per year of attending the first Agricultural Institute in 1922 as measured in 198284 dollars b What was the price per year of attending the first Agricultural Institute in 1922 as measured by 2000 dollars The CPI index 198284 for 2000 is currently 1740 Question 13 You will need to refer to Lab 15 Summary of Annual Ownership Costs Performance Rates and Hourly Operation Costs of Machines 1998 Field Crop Budgets to complete this question How much would you charge per acre to disk a eld with a 110 hp tractor code 1 l and a 16 disk code 162 and cover ownership cost operating cost and a labor cost Use the values in the table for ownership cost and operating cost and a labor wage rate of 1050 per hour