EQ #2 AGEC 105 - Capps (4 pts ) September 12, 2011

EQ #2 EQ #2 AGEC 105 - Capps (4 pts) September 12, AGEC 105 - Capps (4 pts) September 12,

201120111. Suppose that Trent Lewis, a rice farmer near

Beaumont, Texas, garners $650,000 in gross farm income and incurs production expenses of $300,000. In addition, suppose that the CPI was 2.00. Further, suppose that Trent Lewis has assets totaling $17 million and liabilities totaling $9 million.

(a)What is the real net farm income of Trent Lewis?

(b)The equity for this rice farmer is $___________ million.

(c)Another term for equity is _______________.

2. The portion of food expenditures associated with the activities of firms beyond the farm gate is known as the _______________.

(1 pt)

(1 pt)

(1/2 pt)

(1/2 pt)

3. Consider the following chart.

Assuming total utility is defined as U =2*W*CC, (1/2 pt) (a) Which bundle has the highest level of total

utility?(1/2 pt) (b) Which bundle has the lowest level of total

utility?

Bundle Number of Wings (W)

Bottles of Coca-Cola (CC)

A 3 3B 6 4C 9 2D 12 1