“Do you know your basic economic concepts”?

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One of NEAT’s aims is to promote the best use of economics by animal health professionals. The techniques and tools used in economics assessments of animal health and welfare build on a range of key concepts and principles. Having these underpinning ideas in mind is the basis for good economic assessment. Below you find a set of questions to test your knowledge. We would like to encourage you to have a look at them and think which key basic concepts and principles they refer to. The answers and explanations will be given next week.

Question 1:  A client has been advised that she needs to spend time in the evening and weekends checking if her heifers have come into oestrus. Which of the following is TRUE
a.    Her time is equivalent to the leisure activities she would not be able to do
b.    Time spent doing leisure activities has no monetary value and is not important in an economic analysis
c.    Her time needs to be valued at the market rate for salaried time
d.     One or more of the above
Key concept covered?

Question 2: A farmer has found a very cheap source of disinfectant for his cattle foot bath, you do not recognise the brand and the content labelling is not clear. Do you
a.    Tell the farmer that for this type of intervention the cheapest disinfectant should be OK
b.    Ask the farmer to compare the difference in cost of the disinfectants with the change in benefits from using the new disinfectant versus the old one in the footbath
c.    Tell him to buy your disinfectant
d.    None of the above
Explain the key concept we are referring to here.

Question 3: Which one of the following is NOT a productivity measure?
a.    Feed conversion ratio
b.    Margin over concentrate
c.    Livestock enterprise output
d.    Gross margin per labour input
Explain the key concept we are referring to here.

Question 4: You are comparing three different beef suckler rearing farms. With the information below identify which farm has the best system:
a.    Gross margin per cow £175
b.    Gross margin per cow £155
c.    Gross margin per cow £245
d.    It is not possible say which is the best system
Explain the key concept we are referring to here.

Question 5: A partial budget analysis of a short term change estimates the:
a.    Economic profitability
b.    Technical feasibility
c.    Financial feasibility
d.    More than one of the above
Explain the key concept we are referring to here.

Question 6: Cost benefit analysis uses discounting to convert future costs and benefits into present values. The discount rate used for discounting is equivalent to:
a.    Bank interest rates
b.    The rate of return from the best alternative investment
c.    Cost of borrowing money
d.    None of the above
Explain the key concept we are referring to here.

Question 7: A farmer is comparing some alternative business investments. He presents you with the following information and asks for your opinion on which is the best. Which investment would you recommend?
a.    Investment in a grain drier NPV £350,000; BCR 1.25; IRR 12%
b.    Investment in a local business NPV £235,000; BCR 2.34; IRR 15%
c.    Milking equipment to reduce mastitis problems NPV £225,000; BCR 3.45; IRR 18%
d.    Not enough information is provided
Explain the key concept we are referring to here.

 

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