AAE 320 Final Exam Overview & New Topics Study Guide
Get ready for the AAE 320 final exam with this comprehensive overview. Learn about new topics introduced since the last exam and get insights on how to study effectively. Understand the course content on Ag Policy, Commodity Support Programs, and Crop Insurance. Prepare for non-quantitative questions and familiarize yourself with terms related to commodity support programs. Enhance your understanding of crop insurance programs and key concepts for a successful exam.
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Presentation Transcript
Final Exam Review AAE 320 Paul D. Mitchell
Goal Explain what to expect for final exam Overview new topics since last exam Idea of how to study
Final Exam Final Exam: Saturday Dec 12, 2020 Saturday Dec 12, 2020 Available as Word Document 9:00 AM to 11:59 PM on Canvas page as assignment, on Main class page for download and emailed to you Submit answers as Word Document on Canvas by 11:59 PM (Midnight) Add clear scans/photos for potential partial credit for quantitative answers (just like for Exam #1)
Course Overview Introduction Exam 1 Production Economics Exam 1 Farm Finance Exam 2 Taxes and Business Arrangements Exam 2 Ag Policy New Commodity Programs Crop Insurance
New Topics: Ag Policy Introduction to Federal Support of US Agriculture Commodity Programs Crop Insurance
Commodity Support Programs Know basic idea of how each works Price Loss Coverage (PLC) Agriculture Risk Coverage (ARC) Marketing Assistance Loans (MAL) Loan Deficiency Payments (LDP) Dairy Margin Coverage (DMC) Market Facilitation Program (MFP) Problem Set #7 No problem set, so expect non- quantitative questions What triggers a payment for each? Given formula and values, calculate payment How payment changes under different circumstances
Commodity Support Programs Terms to know: Base Acres, Payment Yield, Reference Price, County Revenue Guarantee, Loan Rate, National Marketing Year Average Price, Posted County Price Review initial slides for major stylized facts about commodity support programs Good for true/false & short answer questions Stylized facts about ag subsidies from Introduction to commodity support and Farm Bill For ARC, do not worry about details like how to calculate yield guarantee, just how it works once the revenue guarantee is known
Crop Insurance Crop Insurance Programs Yield vs. Revenue Insurance Coverage Individual vs. Area-wide Coverage YP, RP, AYP, ARP How RP-HPE (harvest price exclusion) policy works differently than regular RP policy Coverage Level, Price Election, Unit Structure What triggers indemnities? How to calculate payments
Crop Insurance Crop insurance subsidies and premiums What subsidization of premiums means Commodity program and crop insurance slides for crop insurance stylized facts Other policy types: CAT, SCO, ECO, DRP, WFRP, PRF, MP Other insurable crops Typical WI practices Good for true/false & short answer questions Where do you buy insurance?
Key Concepts to Know: Exam 1 1) Overview of WI Ag, The US Food System 2) Partial Budget Analysis 3) Optimality Conditions How much input to use: Value of Marginal Product = Input Price Able to apply in table and calculus formats Nothing more than single input production 4) Economics of Cost, Nitrogen in Agriculture, The More-on Principle
Key Concepts to Know: Exam 2 Farm Finance 1) Depreciation Methods Straight Line, IRS Method 2) Financial Analysis Use Balance Sheet and Income Statement to calculate and interpret ratios, returns and rates of return, profit margins Issues: cost vs market basis, cash vs accrual accounting 3) Dairy Farming in Wisconsin, Inelasticity in Agriculture
Key Concepts to Know: Exam 2 Taxes and Business Arrangements Focus on the issues that stay the same, not details that vary Basic idea of how taxes work: Revenue minus Costs Benefit of Section 179 Depreciation Gain = Sale Price Basis What triggers recognition of gain? Sell/buy or give/receive assets? Contribute to or remove from LLC or Corporation Why does Basis change? (Death, Depreciation)
Key Concepts to Know: Exam 2 Taxes and Business Arrangements Types of Taxes Ordinary income, self-employment, capital gain, gift Types of Business Arrangements Sole proprietor, partnership, corporation (C or S), limited liability company (LLC) Main differences: Formation, Taxation, Liability
Exam Preparation Know where to find things we covered in class What s covered where: pre-recorded lectures, recorded live lectures, problem sets, other materials Note: I posted more Canvas lectures for farm programs and crop insurance, not special lectures on main page Treat it like a work project: get it done and move on Contact me with questions or problems/crises that arise Cell: 608-320-1162 text or call Email: pdmitchell@wisc.edu
