Location Biochemistry 1125 AAE 320 Final Exam Review Paul D. Mitchell Fall 2016 Monday Dec 19, 2016 2:45 PM – 4:45 PM Location Biochemistry 1125

Goal Explain what to expect for final exam Overview new topics since last exam Idea of how to study

Study Aids Overheads, Think Breaks Course Readings: Fact Sheets, Extension Presentations etc. Problem Sets Exams taken this year Old Exams Expect this year’s final to be similar to, but not exactly the same as, previous finals

Course Overview New Introduction Exam 1 Production Economics Exam 1 Farm Finance Exam 2 Taxes and Business Arrangements Exam 2 Ag Policy Commodity Programs Crop Insurance Sustainability New

New Topics: Ag Policy Ag Policy Commodity Programs Crop Insurance Special Topics: Sustainability

Commodity Support Programs Know basic idea of how each works Price Loss Coverage (PLC) Agriculture Risk Coverage (ARC) Marketing Assistance Loans (MAL) and Loan Deficiency Payments (LDP) Supplemental Coverage Option (SCO) Dairy Margin Protection Program (MPP) What triggers a payment for each? Given formula and values, calculate payment How payment changes under different circumstances

Commodity Support Programs Terms to know: Base Acres, Payment Yield, Reference Price, County Revenue Guarantee, Loan Rate, National Marketing Year Average Price, Posted County Price Review initial slides for major stylized facts about commodity support programs Good for true/false & short answer questions Stylized facts about ag subsidies from early notes on commodity support and Farm Bill For ARC, do not worry about details like how to calculate yield guarantee, just how it works

Crop Insurance Crop Insurance Programs Yield vs. Revenue Insurance Coverage Individual vs. Area-wide Coverage YP, RP, GRP, GRIP RP with harvest price exclusion CAT Coverage Level, Price Election, Unit Structure Supplemental Coverage Option (SCO) What triggers indemnities? How to calculate payments

Crop Insurance Where do you buy insurance? Crop insurance subsidies and premiums What subsidization of premiums means Commodity program and crop insurance slides for crop insurance stylized facts Other crops, LGM Dairy, Typical WI practices Good for true/false & short answer questions Where do you buy insurance?

Key Concepts to Know: Exam 1 Optimality conditions How much input to use Value of Marginal Product = Input Price How much output to produce Output Price = Marginal Cost Able to apply in table and calculus formats Nothing more than single input production

Key Concepts to Know: Exam 1 Average Cost, Marginal Cost, Total Cost Calculations in table formats and relationships Opportunity Cost and Economic Profit What is it, how to interpret Be able to apply these concepts in context of problems, as well as short answer See 1st Exam and problem sets this year, old final exams Miscellaneous (non-quantitative) topics Wisconsin Ag, strategic management, etc.

Key Concepts to Know: Exam 2 Depreciation Methods Straight Line, IRS Method Financial Analysis Use Balance Sheet and Income Statement to calculate and interpret ratios, returns, rates of return, profit margin Think breaks, problem sets and exams this year, old final exams Look at old exams to see the types of major concepts to know

Taxes, Business Arrangements, and Asset Transfers Look over old exams and problem set, focusing on the issues that stay the same, not details that vary Basic idea of how taxes work: Revenue minus Costs Benefit of Section 179 Gain = Sale Price – Basis What triggers recognition of gain? Sell/buy or give/receive assets? Contribute to or remove from LLC or Corporation Why does Basis change? (Death, Depreciation)

Taxes, Business Arrangements, and Asset Transfers Types of Taxes Ordinary income, self-employment, capital gain, gift Types of Business Arrangements Sole proprietor, partnership, corporation (C or S), limited liability company (LLC) Main differences: Formation, Taxation, Liability

Contact me with Questions Exam Study Many questions on material from the first 2 exams: Comprehensive Exam Focus on Key Concepts Big picture, not details Basic things to remember 5 years from now New Material an important focus See slides above Email best: pdmitchell@wisc.edu Contact me with Questions