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AE_289-09_Exam_3 - practice test

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EXAM #3 Agricultural Economics 289 1 April 2009 NAME _____________________________________ Score ____________ Break-Even Prices (34 points) Crops 1. Your total costs for growing wheat are $480 per acre. Answer the following questions about break-even analysis. A. What is your BEP ($/bu) if your yield is 100 bushels per acre? (2 pt) B. What is your BEP ($/bu) if your yield is 120 bushels per acre? (2 pt) C. What is your BEP ($/bu) if your yield is 80 bushels per acre? (1 pt) D. You are offered a harvest-time contract for $5.00 per bushel. At what yields would your contract be profitable? (3 pt) E. What would be your profit or loss per acre if you sign the $5.00/bu harvest- time contract and your yield is 100 bu/ac? (2 pt) 2. Your break-even price for total potato production costs is $5.00/cwt for October harvest. You decide to rent storage for a one-time fee of $0.40/cwt. Storage operating costs are $0.04/cwt per month. Storage shrink is 2% for November, 1% for December and 1% for January. A. What is your break-even price ($/cwt) for November? (1 month storage) (3 pt) B. You are offered an October contract for $5.25 per cwt and a November contract for $6.00. Which is more profitable and why? (3 pt) 1
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C . What is your cumulative shrink cost ($/cwt) through January? (2 pt) D. What is your break-even price ($/cwt) for January? (3 months storage) (3 pt) Livestock 3. Total costs for your cow-calf operation are $450 per cow. Revenue from sales of bulls, cull cows and replacement heifers is $130 per cow. What is the break- even price ($/cwt) at the following yields of calves sold per cow? A. calves sold per cow = 2.8 cwt (2 pt) B. calves sold per cow = 3.0 cwt (2 pt) 4. Your production costs for calves to be sold in November are $400 PER CALF .
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