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AGB 322
Midterm 1
| Question | Answer |
|---|---|
| INTERNAL to business | Strengths and Weaknesses |
| EXTERNAL to business | opportunities and threats |
| Internal S + W: | Goals and preferences, strategy (business environment), Resources, Organization |
| Hard Goals | Are measurable: income, performance, numbers |
| Soft Goals | Ambiguous: satisfaction, recognition, reputation |
| Most important resource to a business? | PEOPLE |
| Mission Statement | Why are we in business? |
| Vision | What do we want the business to look like in 5-10 years |
| Strategy | How will we get there? (Choices a manager makes about how their business will compete in a particular environment) |
| Product Market Focus | What are we going to produce (offer to the market?) |
| Business System Focus | What are the value adding activities your firm does? (EX: grow grapes, market wine?) |
| What is your competitive premise? | 1. First on market (Apple) 2. Low cost commodity producer (milk) 3. High quality, differentiated product (organic milk) 4. Provide a service (AI) |
| Three Main Functions of Management | Planning, Implementation, Control |
| Planning: | Determine goals/set objectives, develop goods, how/where to market |
| Implementation: | Acquire and maintain resources, schedule activities, communicate plants |
| Control: | Keep financial and production records, monitor progress towards goals |
| How is data NOT information | Data has to be screened, edited, and organized into info. Information is timely, accurate, affects actions and/or prior beliefs |
| Three economic production principles: | What to produce? How to produce it? How much to produce? |
| What to produce? - Economic Model - Decision - Decision Rule | Model: Product-Product Decision: Revenue maximizing combo of outputs Rule: MRT= Py1/Py2 |
| MRT= | Marginal Rate of Transformation: slope defines rate that one good can be redirected to produce another |
| How to produce? | Model: Input-input Decision: Least cost combination of inputs Rule: MRS= Px1/Px2 |
| MRS= | Marginal rate of substitution: rate at which the consumer is willing to give up one good in exchange for another good while keeping the same utility |
| How much to produce? | Model: Input-output Decision: Profit maximizing level of input Rule: MVP=MIC |
| MVP= | Marginal Value Produce= MPP*price of output |
| MPP= | Marginal Physical Product= Change in Y/Change in X |
| MIC= | Marginal Input Cost= Price of the input |
| Break even price= | Cost/yield |
| Break even yield= | cost/price |
| Variable costs= | Short run |
| Total cost= | Long run |
| Residual Analysis Total receipts - total variable cost | = returns over variable cost |
| R.A Returns over variable cost - machinery cost | = returns to land and management |
| R.A. Returns land and management - returns to management | = returns to land |
| R.A. Returns to land - real estate taxes | = net returns to land |
| R.A. Rate of return to land | = net return to land/land value x 100 |
| AVC | = Average variable cost = TVC/output |
| AFC | = Average fixed costs = TFC/output |
| In the SR producers will run as long as... | output price > AVC |
| In the LR producers will run if... | output price > min ATC |
| Farmers and ranchers must cover their.... | Cast expenses to stay in business |
| RUN | MR > min AVC |
| SHUT DOWN | MR < min AVC |
| Input-input rule: least cost combo of inputs is determined by | tangency of isoquant and isocost |
| MPP is __________ in stage II? | DECREASING! |
| MRTS (what is the formula?) does what along the isoquant? | MRTS= p1/p2......CHANGES |
| Input/output -- How much to produce? | MVP=MIC |
| Input/input -- How to produce? | MRTS |
| Partial budget 'benefit' column: | Increased revenues + Lowered costs = TOTAL BENEFITS! |
| Partial budget 'cost' column: | Decreased revenues + Increased costs = TOTAL COSTS |
| Net benefit= | Benefit - cost |
| Benefit/cost ratio= | Benefit/Cost |
Created by:
cdick
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