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Marketing Quiz 3

QuestionAnswer
Commodities trading (buying/selling)are frequently done on___ ____ ____ rather than inspection basis of description
Descriptive trade terms are widely understood and accepted, but ___. Subjective
Misunderstandings are less likely when ___ ___ sort, describe, and certify products. third parties
The sum of the attributes of a commodity that influence its acceptability and value to buyers and thus the price they are willing to pay for it. Quality
Dividing a commodity into classes according to a set of criteria Grading
Grading is typically ___. Voluntary
In the short run, ___ is sorting Grading
Set of firms that move a commodity from the farm to the consumer Marketing Channel Stages
One component of marketing efficiency; a measure of how adequately market prices reflect production and marketing costs throughout the total marketing system; different prices for different qualities Pricing efficiency
A measure of marketing system productivity; the raw ratio of marketing output to marketing input; the flow of the product through the marketing chain Operational efficiency
Grading Contributions to Pricing Efficiency Increases recognition of value differences; better allocates according to demand; improves market news; facilitates futures trading; broadens the market
Grading Contributions to Operational Efficiency Saves time for commercial traders; saves time for consumers; saves time for lenders; permits mixing of separately owned commodities in storage and pooled sales
Buyers agree on the ordinal relationships of the various qualities of a commodity (e.g. milk) Homogeneous Demand
Two or more groups of buyers give different rankings to various qualities (e.g. mean beef vs. fatty beef) Heterogeneous Demand
Who offers grading? Agricultural and Marketing Service (AMS) of the USDA
Pooling of grains can raise (or lower) ___ ____. average grades
Grade may ___ during shipment, loading, or unloading. Decline
Meat ___ is required for health and safety purposes. Inspection
Meat ___ is voluntary for marketing purposes. Grading
Who administers meat inspection? Food Safety and Inspection Service (FSIS)
Meat entering interstate commerce must be ___ inspected. Federally
Inspection takes place at ___ step. every
In meat grading, both ___ and ___ grades are used. Quality and Yield
Quality meat grades are assigned on the basis of ___ and ___. Marbling and Maturity
Fat flecks or streaks in the lean Marbling
Hog grades are primarily ___ grades. Yield
New standards of hog grades adopted in 1984 reflect an ___ in leanness. increase
Four principal lean hog cuts: Ham, loin, picnic shoulder, Boston butt
Fruit and vegetable grades are used mainly within ___ and not at ____. trading;retail
Grading is a ____ system supported by producers/industry. Voluntary
Grading is done by an ___ third party. Unbiased
Examples of organized markets: Livestock auctions; fruit and vegetable terminal markets; futures markets (commodity exchanges)
Usually run by third parties who are not controlled by farmers or agribusiness buyers Organized Markets
"Collective bargaining"; common in fruits, vegetables, nuts, and milk marketing orders; negotiated high prices can lead to expansion and lower prices in the long run Group Negotiation
Any price discovery system outside of organized markets in which a buyer and seller as individuals negotiate a transaction; private treaty; formula pricing Decentralized Individual Negotiation (DIN)
Price-Setting Systems: Firm Price Making; Group Negotiation; Government price setting
More likely for differentiated products; relates to firms in monopolistic competition; prices tend to be more stable Price making by individual firms
The only one part of total transaction or exchange arrangements Pricing
Production contract; procurement contract Vertical Integration Marketing
Firm ownership of contiguous stages in the marketing channel, a firm that owns two or more levels of production or marketing; production contracts Vertical Integration
Normally delivery occurs more than ten days away from selling; written ; used frequently between retail chains and produce suppliers Marketing-Procurement Contract
Involves the buyer in the physical production process. The farmer takes responsibility for caring for broilers, turkeys, hogs owned by a contractor Production Contract
Why should agribusinesses vertically integrate? Market power; savings through increased efficiency; control product quality; efficient flow of product; coordination of production and processing; market security
Why should farmers contract? Separate the pricing decision from the time of delivery; price risk can be transferred to the contractor; access to market
Marketing-pricing alternatives for farmers: M-P contract at fixed price and delivery at harvest; price fixed in futures and delivered at harvest; price fixed in futures but stored at harvest; price cash and delivery at harvest; store on the farm and sell cash; store elevator and wait
Marketing-Pricing depends on: current and expected prices; storage and availability; risk aversion; transaction costs; financial situation
Created by: ellenc6