Elasticity & Surplus
Global Agriculture
World Hunger
GDP,
Unem.& Inflation
Unem.& Inflation
Economic Growth and Development
50
What is the price elasticity of demand?
%change in quantity demanded divided by %change in price
50
What is a bumper crop and is it good for farmers?
A large unexpected crop; bad for farmers due to falling prices and inelastic demand
50
What is the standard measure of global hunger?
Prevalence of undernourishment
50
What is GDP?
The dollar value of all goods and services produced for final sale within a country during a specific time period
50
What determines long-term GDP growth?
Productivity
100
What is Consumer Surplus?
The amount of money a buyer saves when they were willing to pay more for a product than they actually paid.
Consumer surplus = WTP-P
WTP: Willingness to Pay Price
P: Price of Good
100
What are the three characteristics of U.S. agriculture?
Inelastic short-run demand, fluctuating supply, tech-driven long-run growth
100
Which group is most vulnerable to food insecurity?
Poor populations in developing countries
100
What is the expenditure formula for GDP?
GDP = C + I + G + NX
C = consumption
I = investments
G = government spending
NX = net exports (exports - imports)
100
What’s the difference between growth and development?
Growth = more output; Development = improvements in quality of life
150
What is Producer Surplus?
The extra money a seller makes because they sell a product for more than the lowest price they were willing to accept.
Producer surplus=P-WTS=P-MC
WTS: Willingness To Sell Price
P: Price of Good
150
What government policies help the agricultural sector, and which are most efficient?
Supply restrictions and demand boosts are more efficient than price supports
150
What is impact of Covid on world hunger?
Covid has make world hunger issues become worse and wiped off many year's efforts people have made to fight poverty and hunger.
150
What is the inflation rate formula?
(CPI in year 2 - CPI in year 1) / CPI in year 1 * 100
150
What are four factors that drive productivity?
Physical capital, human capital, natural resources, technology
200
What are the numerical and graphical differences between elastic, inelastic, and unit-elastic demand?
Elastic > 1 - looks flatter
Inelastic < 1 - looks steeper
Unit Elastic = 1 - perfectly diagonal
200
Russia is a major oil and gas provider. True or False?
True
200
What is export marginalization?
When developing countries rely heavily on a few exports (primary goods, agricultural products or simply manufactured goods or services) and are vulnerable to market shifts
200
What does CPI measure?
Measures price changes in a fixed basket of consumer goods over time
200
What is "climate apartheid"?
"uh-par-tide" (;
The idea that those least responsible for climate change suffer its worst effects
250
What does a perfectly elastic vs perfectly inelastic demand curve look like?
Perfectly elastic is horizontal; perfectly inelastic is vertical.
250
How does the Ukraine war affect world hunger?
Disrupts exports, raises energy and fertilizer prices
250
How does energy poverty connect to food insecurity?
Limits food production, storage, and transport, increasing hunger risk
250
What’s the difference between GDP deflator and CPI?
GDP deflator:
• Ratio of nominal GDP to real GDP
• Reflects prices of all goods & services produced domestically
• Compares price of currently produced goods and services to price of the same goods and services in the base year
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CPI:
• Reflects prices of goods & services bought by consumers
• Compares price of a fixed basket of goods and services to price of the basket in the base year
250
How does free trade support growth?
By allowing access to new markets and efficiency
300
Graphically in a demand-and supply diagram, which area represents consumer surplus and which area represents producer surplus?
Consumer surplus is the area below the demand curve and above the price line while producer surplus is the area below the price line and above the supply curve.
300
Whom do U.S. farm subsidies favor and what is a consequence of this?
They favor large agribusiness and a few crops; lead to inequity and reduction of small-scale farms and increase in large agribusinesses.
Highly skewed toward five major commodities: wheat, soybean, corn, cotton and rice.
300
What are 4 major challenges faced by least developed countries?
Debt, export marginalization, energy poverty, climate vulnerability
300
What is the natural rate of unemployment?
The unemployment rate that exists when the economy is at full employment. The natural rate includes only frictional (job transitions) and structural (mismatch of skills and jobs) unemployment but excludes cyclical (recession-related) unemployment.
300
What can government policy do to raise productivity and living standard?
Saving and investment
Investment from abroad
Education
Nutrition and Health
Free Trade
Loan from WB and IMF
350
When does deadweight loss occur?
When production is too much or too little compared to the market equilibrium;
Marginal benefit is not equal to marginal cost;
350
What is the difference between agricultural corporate business firms and small or medium sized farms?
Agribusiness firms: large scale, lower average cost, has economies of scale, capital intensive, focus on high-yield crop, accounting for 85% of the market value in agricultural sector.
Small or medium sized firms: small scale, manually labor intensive, a mix of diverse crops, accounting for 97% of farmers but small market value.
350
What are the effects of fertilizer price increases on world hunger?
Lower yields and higher food prices
350
What are formulas for unemployment and labor force participation rates?
Unemployment Rate = (# unemployed / labor force) * 100%;
Labor Participation Rate = (labor force / adult pop.) * 100%
350
How does stability in the political system improve economic development?
It creates a predictable environment for investment, enforce property rights, reduce corruption, and support effective policymaking—all of which encourage long-term growth.
400
How does price elasticity relate to total revenue?
demand is price elastic, price and total revenue move in the opposite direction;
demand is price inelastic, price and total revenue move in the same direction;
demand is price unit-elastic, price changes, total revenue stays the same.
400
According to the video we see in class, can you name a few most advanced agriculture countries all over the world?
China
US
Germany
France
Turkey
Mexico
India
Brazil
400
What role do international food aid programs play in reducing hunger?
They provide short-term relief but can distort local markets
400
Who benefits from unexpected inflation—borrowers or lenders?
Borrowers
400
How does income inequality affect long-term economic growth and social development?
High inequality can limit access to education and health, reduce social mobility, increase instability, and lower overall economic performance.
Other answers may vary.
450
What are determinants of price elasticity of demand?
Close substitute available, demand more price elastic;
Longer timer horizon, demand more price elastic;
A larger portion of the budget, demand more price elastic;
Luxury goods, demand more price elastic;
Narrower market definition, demand more price elastic.
450
What does short-run inelastic demand mean for agricultural prices?
Even small supply changes can cause big price swings
450
What is a bigger problem for world hunger, supply shortages of food or inefficiencies in food access/distribution?
Inefficiencies in food access/distribution often cause hunger, not supply shortages
450
What are two issues with the unemployment rate?
Doesn’t count discouraged workers or differentiate full- vs. part-time
450
According to Transparency.org, in 2024, in the following countries, which country has the lowest corruption level and which country has the highest corruption level?
A. Demark
B. United States
C. China
D. Iceland
Demark, lowest corruption level
China, highest corruption level
500
What is marginal benefit vs. marginal cost and how do they relate to surplus.
They are additional benefits or consequences attained for a specific action.
Surplus is maximized where marginal benefit equals marginal cost; imbalance leads to inefficiency and deadweight loss.
500
Why are agricultural prices more volatile than manufactured goods?
Agricultural goods face weather risks and inelastic demand; manufactured goods have steadier supply/demand
500
How can policy promote long-term food security?
By investing in local agriculture infrastructure, education, and fair trade policies
500
What is the Rule of 72?
The Rule of 72, first introduced by mathematician Luca Pacioli in 1494, is a simplified formula used to estimate how long it takes for an investment to double in value under a fixed annual rate of return.
t=72/r,
t is number of periods required to double an investment's value;
=interest rate per period, as a percentage
500
How can governments support both growth and equity?
Through fair taxation, infrastructure investment, and inclusive education