{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Agribusiness Management Review for Test 2

Agribusiness Management Review for Test 2 - Chapter 5...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 5 Questions 1. Explain how the combination of consumers’ desire for utility maximization with the scarcity of available resources leads to competition in the marketplace and greater satisfaction for all members of society. 2. Define the terms utility, marginal utility, & the principle of diminishing marginal utility as used by economists. Explain how these concepts can be led to choose spinach over ice cream. Utility – Satisfaction; Marginal Utility – Satisfaction obtained from each additional unit of a good; Diminishing Marginal Utility – After consuming each additional unit, your utility declines which in turns will ultimately move you to choose spinach over ice cream. 3. Explain why price is the best allocator of scarce resources in a free market. Resources go to the highest bidder. Producers respond to price signals and would actually shift to receive higher profits. 4. Explain why economists make up the extension between consumers who are willing and those who are able to buy product when they talk about effective demand. Economist make up the extension between consumer who are willing & those who are able to buy a product because you can be willing to buy it but you may not be able to afford the product which does not effect the producer’s bottom line. 5. Identify and explain the factors that influence consumer demand. Which indicate a shift in consumer demand? Explain why shifts in consumer demand are important to agricultural business managers. What should a manager do if a shift in consumer demand for his or her product is found? When the demand schedule shifts from the left to the right, it can affect the long-term profits of the firm. They should reevaluate their marketing plan & marketing mix. Price of the product (own price) – The factor that is most likely to influence the demand of a product is its own price. Seasonality – The demand for many products follows a seasonal pattern. Price of competitor’s products (substitute products) – An increase in the price of tea, for example, could lead some people to substitute coffee for tea. Price of complement goods – It is important to know the impact of changes in the price of goods whose use complements the use of your good. If the price of sugar was to shift significantly, it could affect the demand for coffee.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern