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to reduce the price risk associated with producing or storing a cash commodity
the main reason for hedging is
A charge for capital used in a farmer's cattle herd is usually included in an enterprise budget regardless of whether he borrowed money to buy the cows or not. This illustrates the principle of
all of the above
The present value formula for estimating land prices (PV= annual net returns divided by discount rate) assumes
a) future prices yield can be estimated accurately
b) the discount rate is appropriate
c) income will continue to infinity
d) net income will not trend up or down
e) all of the above
buying a hog Put option
A farmer who buys feeder pigs could use the options market to reduce his price risk by
If the price of a commodity is too high, the supply will be greater than the demand resulting in a
Changes in price within a year which tend to follow the same pattern overtime are called
A decrease in supply with no change in demand
Which of the following would cause an increase in the price of an agriculture commodity?
A marketing function which tends to regulate the supply of a product and provide a stable market price is
lower returns to equity
Increasing leverage during a period when a farm's percent to total capital is less than the interest rate will mean
the surviving joint tenant will eventually own all of the land as a result of right of survivorship
The main difference between a joint tenancy and tenancy in common is
profits when prices go up; losses when prices go down
A trader with a long position in the future's market
The type of life insurance which provides protection for a limited time and is usually cheaper per dollar of protection is called
If the price of a commodity increases by 10% and the quantity purchased decreases by 5%, then the demand for this commodity is
27 1/2 and 39 year property
All depriciable property purchased the same year that is within the same property class must be depreciated using the same method. This applies to all classes of depreciable property EXCEPT:
the demand of widgets is inelastic
The price of widgets changes from $60 to $50 and as a result, the quantity demanded decreases from 90 to 100 units. From this we can conclude that
lower today than yesterday
If the price of September Put option is higher today than yesterday, then one would expect that the price of a September futures contract is
may buy, but is not required to buy, a corn futures contract at a set price
Purchase of a Call option on corn means the buyer
diminishing marginal physical product
The increase in wheat yield become smaller if each additional 10 pounds of nitrogen fertilizer applied after 30 pounds per acre have been applied. This is an example of
all of the above
A decline in the value of total farm assets will
a) increase the rate of return to equity
b) increase the rate of return to assets
c) increase the capital turnover ratio
d) all of the above
When a farmer borrows money to purhcase land, he usually must offer the title to the property as security until the debt has been repaid. This credit instrument is commonly reffered to as
the amount of money borrowed
For an amortized loan, the present value of the loan payments discounted at the loans interest rate is equal to
how much one currency is needed to acquire a unit of another currency
The term "exchange rate" refers to
The maximum amount that can be claimed as a section 179 expense deduction on your 2007 tax return is
By contributing the maximum amount to a Roth IRA a 40-year-old farmer will reduce his taxable incom by
The maximum annual contribution to an IRA is $4,000 per person for somenone under age 50 and _____ for someone age 50 or older
the own-price elasticity of supply estimates the impact on the quantity of a good supplied by a change in the price of the good. Normally, one would expect the own-price elasticity of supply to be
a written agreement by which an owner of property transfers title to someone for the benefit of beneficiaries is a
because of the reduced supply, prices for peaches in Maryland will tend to move upward
A vicious cold spell in the late spring has wiped out the buds on the peach trees grown in Georgia, a major peach producing state. How will this freeze impact the price received for peaches by Maryland peach producers?
the capital gains taxes that would be due should a farmer sell his land is an example of
the income elasticity of demand estimates the impact of a change in income on the demand for a good. For normal goods, the income elasticity of demand is
Economies use elasticities to relate the percentage change in one variable to the percentage change in another variable. The cross-price elasticity of demand estimates the impact on the demand for a good with respect to the change in the price of another good. A positive cross-price elasticity indicates two goods are
is greater than the market valuation
Farmer Johnson has a rate of return on assets of 5%. When assets are valued using the cost method, and a rate of return on assets of 7% when the assets are valued using market valuation. This means that the value of assets using the cost method
Farmer Brown purchases a new tractor A record keeping system which records both the addition to the equipment and the reduction of cash is called
The total tax deduction for conservation expenses in any tax year is limited to ___% of your gross income from farming for the year
An increased quantity will be sold at the same price
If both demand and supply increased equally for an agricultural product, what will be the results on the quantity of the product sold and the price received?
where marginal revenue equals marginal cost
Marginal revenue and marginal cost are useful concepts in determining the profit maximizing output level. Profits will be at its maximum level
grow only corn silage
A farmer obtains 4-ton hay yields and 12-ton corn silage yields. His cash costs of production are $30 per ton of hay and $14 per ton of corn silage.One pound of hay will substitute for 2 pounds of corn silage and not affect rate of gain what proportion of hay and silage should this farmer raise for cattle fed?
Economists use elasticities to relate the percentage change in one variable to another. The cross-price elasticity of demand estimates the impact on the demand for a good with respect to change in the price of another good. A negative cross-price elasticity indicates the two goods are
all of the above
Which of the following is a market function?
e) all of the above
You can claim a tax deduction for a charitable contribution of $____ or more only if you have a written acknowledgement from the charitable organization
If the price of a commodity increases by 5% and the quantity purchased decreases by 10%, then the demand for this commodity is
For an individual under age 50, the maximum allowable IRA contribution and deduction in 2010 was
Due to the sharp increase in hog numbers average hog prices were much lower in 2008 than 2007. Demand for corn to feed the hogs ____ in 2008 compared to 2007
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