Marketing — Agriculture Economics Reviewer Questions

12 board-style Marketing items for the Agriculturist Licensure Examination, free and open to every examinee. Fixed versus variable, average versus marginal, and cost versus return are the distinctions most items are built on. Get those clean first.

12 questions in this topic · part of Agriculture Economics · every answer explained

Practise Marketing free

Sample Marketing questions with answers and explanations

Board-style items taken from the Agriculture Economics bank. Every answer is explained, which is the part that makes a review question worth doing twice.

When the price of palay falls from PHP 20 to PHP 18, quantity demanded rises from 1,000 to 1,100 sacks. What is the price elasticity of demand?
- A. -1.0, unitary elastic correct
- B. -0.10, inelastic
- C. -10.0, highly elastic
- D. +1.0, elastic
Why: Percentage change in quantity = 100/1,000 = 10%; in price = -2/20 = -10%. Elasticity = 10 / -10 = -1.0, unitary. At unitary elasticity total revenue is unchanged by a price move, which is why this value is the dividing line for pricing decisions.
Demand for a vegetable has price elasticity of -0.4. If price rises 10%, what happens to total revenue?
- A. It falls, because quantity always falls when price rises
- B. It rises, because quantity falls proportionally less than price rose correct
- C. It is unchanged, because elasticity is negative
- D. It falls by 4%, matching the elasticity
Why: Quantity falls only 4% while price rises 10%, so revenue rises roughly 6%. With inelastic demand, price and revenue move together -- which is why a good harvest can leave farmers collectively worse off than a poor one.
A farmer receives PHP 18/kg while consumers pay PHP 30/kg. What is the marketing margin, and the farmer's share?
- A. PHP 12 margin; 40% farmer's share
- B. PHP 18 margin; 60% farmer's share
- C. PHP 12 margin; 60% farmer's share correct
- D. PHP 30 margin; 40% farmer's share
Why: Margin = 30 - 18 = PHP 12; farmer's share = 18/30 = 60%. A wide margin is not automatically exploitation -- it may reflect genuine transport, storage and processing costs -- but it identifies where in the chain to look for savings.
Income rises 20% and a household's rice purchases fall 4%. What is the income elasticity, and what type of good is rice here?
- A. +0.2, a normal necessity
- B. -5.0, an inferior good
- C. +5.0, a luxury
- D. -0.2, an inferior good correct
Why: Income elasticity = -4% / +20% = -0.2. A negative value defines an inferior good: as households grow richer they substitute toward other staples and meat. The sign, not the magnitude, is what classifies the good.
When the price of pork rises 15%, chicken sales rise 9%. What is the cross-price elasticity and the relationship?
- A. +0.6, substitutes correct
- B. -0.6, complements
- C. +1.67, substitutes
- D. -1.67, complements
Why: Cross elasticity = +9% / +15% = +0.6. A positive sign means the goods are substitutes -- buyers move to chicken when pork dearens. A negative value would indicate complements, goods consumed together such as bread and butter.
Supply is Qs = 200 + 3P and demand is Qd = 800 - 2P. What is the equilibrium price?
- A. PHP 200
- B. PHP 120 correct
- C. PHP 600
- D. PHP 100
Why: Set Qs = Qd: 200 + 3P = 800 - 2P, so 5P = 600 and P = 120. Substituting back gives an equilibrium quantity of 560 in either equation, which is the check that the algebra was done correctly.
Using Qs = 200 + 3P and Qd = 800 - 2P, a price ceiling of PHP 100 is imposed. What results?
- A. A surplus of 100 units
- B. A shortage of 600 units
- C. A shortage of 100 units correct
- D. No effect, since 100 is above equilibrium
Why: At P = 100: Qd = 600, Qs = 500, so demand exceeds supply by 100 units. A ceiling BELOW the equilibrium of PHP 120 always creates a shortage; one set above equilibrium would be non-binding and change nothing.
Storing corn for four months costs PHP 1.50/kg in total. The price now is PHP 14/kg. What price in four months makes storage just worthwhile?
- A. Above PHP 14.00/kg
- B. Above PHP 12.50/kg
- C. Above PHP 21.00/kg
- D. Above PHP 15.50/kg correct
Why: Storage pays only if the price rise covers the cost of carrying: 14.00 + 1.50 = PHP 15.50. Anything less and the farmer would have done better selling at harvest, however much the nominal price has risen in the interim.

Practise the full Agriculture Economics bank free

Marketing — Agriculture Economics Reviewer Questions

Sample Marketing questions with answers and explanations

When the price of palay falls from PHP 20 to PHP 18, quantity demanded rises from 1,000 to 1,100 sacks. What is the price elasticity of demand?

Demand for a vegetable has price elasticity of -0.4. If price rises 10%, what happens to total revenue?

A farmer receives PHP 18/kg while consumers pay PHP 30/kg. What is the marketing margin, and the farmer's share?

Income rises 20% and a household's rice purchases fall 4%. What is the income elasticity, and what type of good is rice here?

When the price of pork rises 15%, chicken sales rise 9%. What is the cross-price elasticity and the relationship?

Supply is Qs = 200 + 3P and demand is Qd = 800 - 2P. What is the equilibrium price?

Using Qs = 200 + 3P and Qd = 800 - 2P, a price ceiling of PHP 100 is imposed. What results?

Storing corn for four months costs PHP 1.50/kg in total. The price now is PHP 14/kg. What price in four months makes storage just worthwhile?

Other Agriculture Economics topics