Agricultural Economics Exam Review

Flashcards covering key concepts from the Agricultural Economics Lecture.

Perfect Competition

Characterized by homogenous goods, perfect information, and free entry and exit of firms.

Cartel

Occurs when firms collude instead of acting independently to maximize individual profits.

Sherman Act of 1890

Addresses monopolization and attempts to monopolize but does not directly regulate mergers.

High Hirschman-Herfindahl Index (HHI)

Indicates a highly concentrated market.

Horizontal Differentiation

Consumers disagree on the ranking of goods based on a specific attribute.

NOT a source of market power

Free entry of firms

Lerner Index

The degree of market power

U.S. law regulating antitrust behavior in the livestock industry

Packers & Stockyards Act

Vertical Differentiation Example

Prime beef vs. choice beef

Food and Agribusiness Merger Moratorium and Antitrust Review Act of 2022

Prohibit mergers and acquisitions in the agrifood sector until Congress acts on recommendations.

Ethanol is Renewable

Made from organic materials that can be replenished.

Land retirement programs

Promote sustainable practices on active farmland.

Renewable Fuel Standard (RFS)

National policy that sets carbon -intensity targets for fuels.

Ethanol Production

U.S. ethanol production uses approximately 45% of the nation's corn crop.

Externalities

The private costs or benefits of production differ from the social costs or benefits.

Public Good

National defense

Policy incentivizes sustainable practices through financial and technical support

Environmental Quality Incentives Program

Primary motivation behind U.S. biofuel policies

Energy security and environmental benefits

Difference between the Renewable Fuel Standard (RFS) and Low- Carbon Fuel Standard (LCFS)

RFS targets energy efficiency, while LCFS focuses on reducing carbon intensity.

NOT a feedstock for biofuels

Coal

Prop 12

Expanded housing standards to pork and veal production, applying restrictions even to out-of-state producers.

Animal Welfare

Animal welfare requirements often align with environmental goals, influencing legislation and production practices.

Credence Attribute

A characteristic that consumers must trust or believe in, as it cannot be directly observed

The Supplemental Nutrition Assistance Program (SNAP)

Provides benefits to not only to families with children.

Obesity-related medical costs in 2019

$173 billion in the United States.

WIC eligibility

Based on income, nutritional risk, and categorical requirements, such as being a pregnant or nursing woman.

Body Mass Index (BMI)

Ideal individual measure for determining obesity.

Food Consumption

Food consumption externalities are reflected when the marginal social cost exceeds the marginal private cost.

Major change to SNAP during the COVID-19 pandemic

Introduction of a temporary 15% benefit increase

Largest portion of SNAP participants

Families with children

NOT an official goal of the Food and Nutrition Service (FNS)

Increase profitability of highly processed food

Criticism of using BMI as a measure of obesity

It does not distinguish between fat and muscle.

Farm programs to significantly contribute to obesity in the U.S.

Consumption patterns must respond to relative price changes of unhealthy foods.