Question 1

Which of the following statements is true?

Accepted Answer

A)  There are more farms today than at the beginning of the 20th century. 
B)  An individual farmer prefers good weather to bad weather, but farmers as a group may prefer bad weather to good weather, especially if the demand for their products is inelastic. 
C)  Income elasticity of demand measures the responsiveness of a change in quantity supplied to changes in income. 
D)  a and b 
E)  b and c 
A)  There are more farms today than at the beginning of the 20th century. 
B)  An individual farmer prefers good weather to bad weather, but farmers as a group may prefer bad weather to good weather, especially if the demand for their products is inelastic. 
C)  Income elasticity of demand measures the responsiveness of a change in quantity supplied to changes in income. 
D)  a and b 
E)  b and c B

Question 2

Increased productivity in the agricultural sector in conjunction with an inelastic demand curve for agricultural goods has caused a(n)__________ in output,a(n)__________ in price,and __________ revenues for farmers.

Accepted Answer

A)  increase; decrease; higher 
B)  increase; decrease; lower 
C)  decrease; increase; higher 
D)  decrease; increase; lower 
E)  increase; increase; higher 
A)  increase; decrease; higher 
B)  increase; decrease; lower 
C)  decrease; increase; higher 
D)  decrease; increase; lower 
E)  increase; increase; higher B

Question 3

The formula for determining the production flexibility contract payment is:

Accepted Answer

A)  contract acreage x 0.75 x yield per acre x crop payment rate. 
B)  contract acreage x 0.85 x yield per acre x $1. 
C)  contract acreage x 0.85 x yield per acre x crop payment rate. 
D)  contract acreage - (0.85 x contract acreage) x yield per acre x crop payment rate. 
E)  There is no formula for the production flexibility contract payment. There is only a flat fee that changes annually. 
A)  contract acreage x 0.75 x yield per acre x crop payment rate. 
B)  contract acreage x 0.85 x yield per acre x $1. 
C)  contract acreage x 0.85 x yield per acre x crop payment rate. 
D)  contract acreage - (0.85 x contract acreage) x yield per acre x crop payment rate. 
E)  There is no formula for the production flexibility contract payment. There is only a flat fee that changes annually. C

Question 4

A decrease in the supply of an agricultural product will increase the total revenue of farmers if the demand for the agricultural product is

Accepted Answer

A)  income elastic. 
B)  income inelastic. 
C)  price elastic. 
D)  price inelastic. 
E)  none of the above 
A)  income elastic. 
B)  income inelastic. 
C)  price elastic. 
D)  price inelastic. 
E)  none of the above

Question 5

If the demand curve for agricultural products is elastic and farmers as a group become more productive,then prices of agricultural goods will __________ and total revenue earned by farmers will __________.

Accepted Answer

A)  decrease; increase 
B)  decrease; decrease 
C)  increase; increase 
D)  increase; decrease 
E)  We cannot answer this question without knowing how elastic the demand curve is. 
A)  decrease; increase 
B)  decrease; decrease 
C)  increase; increase 
D)  increase; decrease 
E)  We cannot answer this question without knowing how elastic the demand curve is.

Question 6

Suppose the demand curve for corn is inelastic between the current price and price that exists after the supply of corn falls.It follows that

Accepted Answer

A)  fewer farmers are producing corn at the new price than at the old price. 
B)  the total revenue for corn is lower at the new price than at the old price. 
C)  the total revenue for corn is higher at the new price than at the old price. 
D)  more farmers are producing corn at the new price than at the old price. 
E)  a and c 
A)  fewer farmers are producing corn at the new price than at the old price. 
B)  the total revenue for corn is lower at the new price than at the old price. 
C)  the total revenue for corn is higher at the new price than at the old price. 
D)  more farmers are producing corn at the new price than at the old price. 
E)  a and c

Question 7

During the twentieth century,the U.S.farm sector experienced

Accepted Answer

A)  large increases in its ability to produce output. 
B)  relatively little improvement in its ability to produce output. 
C)  a marked decrease in its ability to produce output. 
D)  relatively stable demand for its output. 
E)  increasing relative prices for its output. 
A)  large increases in its ability to produce output. 
B)  relatively little improvement in its ability to produce output. 
C)  a marked decrease in its ability to produce output. 
D)  relatively stable demand for its output. 
E)  increasing relative prices for its output.

Question 8

At the beginning of the 20th century one farmer in the U.S.produced enough to feed ____________ people,and at the end of the century,one farmer produced enough to feed ____________ people.

Accepted Answer

A)  20; 40 
B)  7; 15 
C)  12; 42 
D)  8; 35 
A)  20; 40 
B)  7; 15 
C)  12; 42 
D)  8; 35

Question 9

Which of the following statements represents a correct sequence of events?

Accepted Answer

A)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the left, price rises, and total revenue rises assuming demand is inelastic. 
B)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the right, price rises, and total revenue rises assuming demand is inelastic. 
C)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the right, price falls, and total revenue falls assuming demand is elastic. 
D)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the left, price falls, and total revenue rises assuming demand is elastic. 
E)  none of the above 
A)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the left, price rises, and total revenue rises assuming demand is inelastic. 
B)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the right, price rises, and total revenue rises assuming demand is inelastic. 
C)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the right, price falls, and total revenue falls assuming demand is elastic. 
D)  Productivity rises in the agriculture sector, the supply curve of foodstuffs shifts to the left, price falls, and total revenue rises assuming demand is elastic. 
E)  none of the above

Question 10

If market demand is inelastic and supply is subject to severe shifts from season to season,it follows that

Accepted Answer

A)  price changes are likely to be small. 
B)  price changes are likely to be large. 
C)  total revenue is likely to be constant over time. 
D)  total revenue is likely to be highly volatile. 
E)  b and d 
A)  price changes are likely to be small. 
B)  price changes are likely to be large. 
C)  total revenue is likely to be constant over time. 
D)  total revenue is likely to be highly volatile. 
E)  b and d

Question 11

Exhibit 39-3
  
-Refer to Exhibit 39-3.If P3 is a price support,the amount sold on private markets is

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q2 - Q3. 
E)  Q1 - Q3. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q2 - Q3. 
E)  Q1 - Q3.

Question 12

An agricultural price support is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 13

An agricultural price support

Accepted Answer

A)  will create a surplus in the relevant market, assuming the price support is above equilibrium price. 
B)  will create a shortage in the relevant market, assuming the price support is above equilibrium price. 
C)  is an example of a price floor. 
D)  will lead to greater total revenue for farmers if demand (for the product) farmers sell is inelastic between the equilibrium price and the price support (and assuming the price support is above equilibrium price). 
E)  a, c, and d 
A)  will create a surplus in the relevant market, assuming the price support is above equilibrium price. 
B)  will create a shortage in the relevant market, assuming the price support is above equilibrium price. 
C)  is an example of a price floor. 
D)  will lead to greater total revenue for farmers if demand (for the product) farmers sell is inelastic between the equilibrium price and the price support (and assuming the price support is above equilibrium price). 
E)  a, c, and d

Question 14

Exhibit 39-9
  
-Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the price at which consumers will buy the food item is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
E)  There is not enough information to answer the question. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
E)  There is not enough information to answer the question.

Question 15

When the government implements an agricultural price support (above the equilibrium price),a surplus results and the government buys the surplus at the support price.

Accepted Answer

A) True 
 B)False

Question 16

If the demand for a particular farm product is inelastic between price P? and P? (where P? > P?),farmers as a group would want to sell their product at the

Accepted Answer

A)  higher price, but an individual farmer would rather sell his product at the lower price. 
B)  higher price, and an individual farmer would rather sell his product at the higher price, too. 
C)  lower price, but an individual farmer would rather sell his product at the higher price. 
D)  lower price, and an individual farmer would rather sell his product at the lower price, too. 
A)  higher price, but an individual farmer would rather sell his product at the lower price. 
B)  higher price, and an individual farmer would rather sell his product at the higher price, too. 
C)  lower price, but an individual farmer would rather sell his product at the higher price. 
D)  lower price, and an individual farmer would rather sell his product at the lower price, too.

Question 17

Exhibit 39-1
  
-Refer to Exhibit 39-1.At the support price of PT,how many units of the good must the government buy and store?

Accepted Answer

A)  Q1 
B)  Q3 
C)  Q1 - Q3 
D)  Q2 - Q3 
A)  Q1 
B)  Q3 
C)  Q1 - Q3 
D)  Q2 - Q3

Question 18

Exhibit 39-3
  
-Refer to Exhibit 39-3.If P3 is a target price,the price at which output will be purchased is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P3 - P2. 
E)  P1 - P2. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P3 - P2. 
E)  P1 - P2.

Question 19

Under a marketing quota system,

Accepted Answer

A)  the government sets a limit on the quantity of a product that a farmer is allowed to bring to market. 
B)  farmers are paid to take part of their land out of cultivation. 
C)  farmers are given limits as to the number of acres that can be used to produce a particular product. 
D)  farmers are paid the difference between the market price of their product and a governmentally determined price that would maintain an established price parity. 
E)  the government establishes a minimum price that farmers will be paid for their product, which causes the farmers to cut back on the number of acres planted. 
A)  the government sets a limit on the quantity of a product that a farmer is allowed to bring to market. 
B)  farmers are paid to take part of their land out of cultivation. 
C)  farmers are given limits as to the number of acres that can be used to produce a particular product. 
D)  farmers are paid the difference between the market price of their product and a governmentally determined price that would maintain an established price parity. 
E)  the government establishes a minimum price that farmers will be paid for their product, which causes the farmers to cut back on the number of acres planted.

Question 20

Exhibit 39-3
  
-Refer to Exhibit 39-3.If P3 is a target price,the deficiency payment per unit is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P3 - P1. 
E)  P3 - P2. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P3 - P1. 
E)  P3 - P2.

Exam 39: Agriculture: Problems, Policies, and Unintended Effects

Which of the following statements is true?

Increased productivity in the agricultural sector in conjunction with an inelastic demand curve for agricultural goods has caused a(n)__________ in output,a(n)__________ in price,and __________ revenues for farmers.

The formula for determining the production flexibility contract payment is:

A decrease in the supply of an agricultural product will increase the total revenue of farmers if the demand for the agricultural product is

If the demand curve for agricultural products is elastic and farmers as a group become more productive,then prices of agricultural goods will __________ and total revenue earned by farmers will __________.

Suppose the demand curve for corn is inelastic between the current price and price that exists after the supply of corn falls.It follows that

During the twentieth century,the U.S.farm sector experienced

At the beginning of the 20th century one farmer in the U.S.produced enough to feed ____________ people,and at the end of the century,one farmer produced enough to feed ____________ people.

Which of the following statements represents a correct sequence of events?

If market demand is inelastic and supply is subject to severe shifts from season to season,it follows that

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a price support,the amount sold on private markets is

An agricultural price support is an example of a price ceiling.

An agricultural price support

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the price at which consumers will buy the food item is

When the government implements an agricultural price support (above the equilibrium price),a surplus results and the government buys the surplus at the support price.

If the demand for a particular farm product is inelastic between price P? and P? (where P? > P?),farmers as a group would want to sell their product at the

Exhibit 39-1 -Refer to Exhibit 39-1.At the support price of PT,how many units of the good must the government buy and store?

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a target price,the price at which output will be purchased is

Under a marketing quota system,

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a target price,the deficiency payment per unit is

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Filters

Increased productivity in the agricultural sector in conjunction with an inelastic demand curve for agricultural goods has caused a(n) in output,a(n) in price,and __ revenues for farmers.

If the demand curve for agricultural products is elastic and farmers as a group become more productive,then prices of agricultural goods will and total revenue earned by farmers will .

At the beginning of the 20th century one farmer in the U.S.produced enough to feed people,and at the end of the century,one farmer produced enough to feed people.

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a price support,the amount sold on private markets is

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P₁,the price at which consumers will buy the food item is

Exhibit 39-1 -Refer to Exhibit 39-1.At the support price of P_T,how many units of the good must the government buy and store?

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a target price,the price at which output will be purchased is

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a target price,the deficiency payment per unit is