is defined as the process of determining the price of an good or service in the

Question

is defined as the process of determining the price of an good or service in the marketplace through the interactions of buyers and sellers. a. Mark up pricing c. Market equilibrium b. Price discovery d. Price making 17. As the amount of information on supply and demand conditions increase, the level of price transparency in the market . b. decreases c. does not change conditions d. depends on market 18. When a producer enters into a production contract with an agricultural contractor, which of the following statements is false? a. The farmer provides labor, housing, and equipment under the contract. b. The farmer receives a payment per unit of production delivered c. The farmer only faces production risk. d. The farmer only faces output price risk. 19. What type of agricultural contract only specifies the price, delivery date, and quality of product at the time the contract is agreed to. a. formula contract contract c. production contract based contract b. forward d. value 20. An indicator of the degree of competition in an industry is the concentration ratio. It measures a. The percentage of sales in the industry by the largest firms. b. The percentage of profit in the industry by the smallest firms. c. The sales in the industry as a percentage of all consumption in the U.S d. The profitability of the industry 21. Research by agricultural economists suggest that there seems to be a market concentration in an industry and the proportion of production produced that is marketed on contract. a. positive relationship between the level of b. negative c. no relationship

Explanation / Answer

Question no.116) Correct answer option= b

Explanation: Definition of price discovery is" the process of buyers and sellers arriving at a transaction price for the given quantity and quality of a product at a given time and place." Price making is a term associated with the market power of a firm and hence does not suit here. Mark up pricing is a subtype of pricing and market equilibrium is a point at which demand supply become equal hence correct option is=b.

Question no.117) Correct answer option= a

Explanation: As the level of information increases in the market, the market will lead to symmetric information wherein both buyers and sellers would be aware of prices and hence price transparency will increase.

Question no.118) Correct answer option= d

Explanation: When a producer enters into a production contract with an agricultural contractor he agrees to buy agricultural output compliant with quantity and quality at a certain price and hence farmer only does not face output price risk.Rest all are correct in terms of the production contract.

Question no.119) Correct answer option= c

Explanation: the forward contract has quantity obligations which are not in production contract as farmer receives compensation for per unit production. There is no such term like value-based contract ( Value chain based contracts are different) and formula contract.Hence correct answer is option c.

Question no.120) Correct answer option= a

Explanation: Definition of concentration ratio is" a measure of the percent market share in an industry held by the largest firms within that industry."Hence definition itself gives the correct answer.Rest options are statements and can be eliminated by knowing the definition.

Question no.121) Correct answer option= a

Explanation: Only when large firms with higher market share are present in the industry the concentration ratio will be large and for 1-5 large numbers to control market they will have to have higher number of contracts and control output and hence there is positive relationship between the level of market concentration in an industry and the proportion of production produced that is marketed on contract.

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