1. 2014 State Farm Management Non- Math Problems

2. 7. How many pounds are in a metric ton? A. 2,000.0 B. 2,204.6 C. 3,666.7 D. 4,012.5 E. None of the above B

3. 8. Using leverage to expand your business will increase profitability if your A. return on equity equals the interest rate. B. return on equity is lower than the interest rate. C. return on assets is higher than the interest rate. D. return on assets is lower than the interest rate. E. None of the above C

4. 12. A grain farmer who normally stores his soybeans at a local elevator has decided to use the options market to create a synthetic storage. To do so he will sell his beans at harvest and A. buy a put option. B. sell a put option. C. buy a call option. D. sell a call option. C

5. 15. The price of a product changes from $100 to $90 and, as a result, the quantity demanded increased from 50 to 60 units. From this we can conclude that A. the demand is elastic. B. the demand is inelastic. C. the demand is of unit elasticity. D. the demand has increased. E. None of the above A

6. 16. Corn and grain sorghum are substitutes for each other in many livestock feed rations. Assuming they are substitutes, an increase in the supply of corn would cause the demand for grain sorghum to A. shift to the left. B. shift to the right. C. increase. D. remain unchanged. E. none of the above A

7. 17. If quantity supplied changes by 10% when price changes by 5%, the price elasticity of supply is A. 0.2 B. 0.5 C. 2 D. 5 E. None of the above C

8. 21. A speculator with a short position in the futures market A. profits when prices go down, loses when prices go up. B. profits when prices neither go up nor down. C. profits when prices go up, loses when prices go down. D. loses when prices go down. A

9. 23. A Subchapter S corporation can have no more than A. 10 shareholders. B. 35 shareholders. C. 75 shareholders. D. 100 shareholders. E. There is no limit on number of shareholders. D

10. 24. The capital gains taxes that would be due should a farmer sell his land is an example of a A. current liability. B. long-term liability. C. deductible expense. D. contingent liability. E. None of the above D

11. 25. Which of the following would decrease a crop farm’s capital turnover ratio? A. Higher yields B. Higher crop prices C. Lower land prices D. All of the above E. None of the above E

12. 27. A cattle feeder, wishing to use futures markets to hedge the price of slaughter cattle, would at the time of his cattle purchase A. buy futures contracts expecting to sell the contracts when selling cattle. B. sell futures contracts expecting to sell more contracts when selling cattle. C. sell futures contracts expecting to buy contracts when selling cattle. D. buy futures contracts expecting to buy more contracts when selling cattle. E. None of the above C

13. 28. An increase in the value of the U.S. dollar relative to the currency of other countries should result in A. more costly imports. B. less costly imports. C. increased exports. D. no effect on imports or exports. E. None of the above B

14. 31. A projection of all income and expenses associated with growing an acre of a particular crop would be called A. a partial budget. B. an enterprise budget. C. a whole farm budget. D. an income statement. E. a balance sheet. B

15. 35. In a livestock enterprise budget prepared on July 1, home-grown feed A. should not be included as a cost. B. should be included, valued at its net market price. C. should be included valued at its cost of production. D. should be valued at past year’s inventory value. E. None of the above B

16. 37. There is not a CME Group soybean futures contract for which of these months? A. May B. July C. September D. December E. None of the above D

17. 39. A CME Group hog futures contract covers how many pounds of market hogs? A. 30,000 B. 40,000 C. 50,000 D. 60,000 E. None of the above B

18. 42. The USDA agency with primary responsibility for improving foreign market access for U.S. products is A. FAS. B. ERS. C. FS. E. FSA. E. None of the above A

19. 43. A price ceiling set below the equilibrium price creates A. shortages. B. black markets. C. surpluses. D. A and B. E. None of the above D

20. 44. The income that could have been received if the input had been used in its most profitable alternative use is A. alternative income. B. marginal revenue. C. not important in agriculture. D. opportunity cost. E. None of the above D

21. 46. If a farmer is to carry a hedge through to completion, the farmer A. will always make a profit. B. must always deliver the hedged commodity at the local elevator. C. must be prepared to meet all margin calls. D. must avoid using options. E. None of the above C

22. 47. Salvage values do not need to be considered when comparing a cash outright purchase to A. a credit purchase. B. a financial lease. C. custom hire. D. All of these E. None of these A

23. 48. Operating costs do not need to be considered when comparing custom hire to A. a cash outright purchase. B. a financial lease. C. a credit purchase. D. All of these E. None of these E

24. 49. The value of operator labor needs to be considered when comparing a credit purchase to A. a cash outright purchase. B. a financial lease. C. custom hire. D. All of these E. None of these C