Question 1

The change in the price of a foodstuff will be greater,

Accepted Answer

A)  the smaller the change in the supply of the foodstuff. 
B)  the greater the change in the supply of the foodstuff and the more inelastic the demand curve for the foodstuff. 
C)  the lesser the change in the supply of the foodstuff and the more inelastic the demand curve for the foodstuff. 
D)  the greater the change in the supply of the foodstuff and the more elastic the demand curve for the foodstuff. 
E)  the lesser the change in the supply of the foodstuff and the more elastic the demand curve for the foodstuff. 
A)  the smaller the change in the supply of the foodstuff. 
B)  the greater the change in the supply of the foodstuff and the more inelastic the demand curve for the foodstuff. 
C)  the lesser the change in the supply of the foodstuff and the more inelastic the demand curve for the foodstuff. 
D)  the greater the change in the supply of the foodstuff and the more elastic the demand curve for the foodstuff. 
E)  the lesser the change in the supply of the foodstuff and the more elastic the demand curve for the foodstuff.

Question 2

Which of the following combinations of factors comes closest to describing the situation in agriculture?

Accepted Answer

A)  elastic demand for agricultural products and large swings in supply 
B)  elastic demand for agricultural products and small swings in supply 
C)  inelastic demand for agricultural products and constant supply 
D)  inelastic demand for agricultural products and large swings in supply 
E)  none of the above 
A)  elastic demand for agricultural products and large swings in supply 
B)  elastic demand for agricultural products and small swings in supply 
C)  inelastic demand for agricultural products and constant supply 
D)  inelastic demand for agricultural products and large swings in supply 
E)  none of the above

Question 3

Which of the following directly (as opposed to indirectly)raises the price of agricultural products?

Accepted Answer

A)  marketing quota system 
B)  acreage allotment program 
C)  paying farmers not to produce 
D)  price supports 
E)  all of the above 
A)  marketing quota system 
B)  acreage allotment program 
C)  paying farmers not to produce 
D)  price supports 
E)  all of the above

Question 4

Which of the following best describes the agricultural sector for much of the 20th century and today?

Accepted Answer

A)  high productivity, price elasticity of demand less than 1, income elasticity of demand greater than 1 
B)  low productivity, price elasticity of demand greater than 1, income elasticity of demand less than 1 
C)  high productivity, price elasticity of demand less than 1, income elasticity of demand less than 1 
D)  low productivity, price elasticity of demand less than 1, income elasticity of demand greater than 1 
A)  high productivity, price elasticity of demand less than 1, income elasticity of demand greater than 1 
B)  low productivity, price elasticity of demand greater than 1, income elasticity of demand less than 1 
C)  high productivity, price elasticity of demand less than 1, income elasticity of demand less than 1 
D)  low productivity, price elasticity of demand less than 1, income elasticity of demand greater than 1

Question 5

Exhibit 39-4
  
-Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

Accepted Answer

A)  0 
B)  200 
C)  700 
D)  900 
A)  0 
B)  200 
C)  700 
D)  900

Question 6

If we assume that the income elasticity of demand for food has been around 0.2 and that agricultural producers have become increasingly more productive,we can conclude that

Accepted Answer

A)  prices of food have increased. 
B)  supply increases have been less than demand decreases. 
C)  as consumers' real incomes have been increasing over the years, they have been spending absolutely less on food. 
D)  prices of food have been stable. 
E)  none of the above 
A)  prices of food have increased. 
B)  supply increases have been less than demand decreases. 
C)  as consumers' real incomes have been increasing over the years, they have been spending absolutely less on food. 
D)  prices of food have been stable. 
E)  none of the above

Question 7

If the demand curve for agricultural products is inelastic,then it would be in the best interest of farmers as a group to

Accepted Answer

A)  increase output and thereby receive greater revenues. 
B)  cause the price of their product to decrease. 
C)  find some way to decrease the quantities of output that are placed on the market for sale. 
D)  petition the government to find a way to decrease the demand for their product. 
E)  a and b 
A)  increase output and thereby receive greater revenues. 
B)  cause the price of their product to decrease. 
C)  find some way to decrease the quantities of output that are placed on the market for sale. 
D)  petition the government to find a way to decrease the demand for their product. 
E)  a and b

Question 8

Increased productivity in agriculture leads to lower prices for consumers and higher revenues for farmers.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 39-9
  
-Refer to Exhibit 39-9.Under a price support program,with the price support set at P1,consumers will end up paying a price of

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 10

Which of the following is not an effect of an agricultural price support?

Accepted Answer

A)  a surplus 
B)  fewer exchanges 
C)  higher prices paid by consumers 
D)  government purchase and storage of surplus 
E)  higher-quality products 
A)  a surplus 
B)  fewer exchanges 
C)  higher prices paid by consumers 
D)  government purchase and storage of surplus 
E)  higher-quality products

Question 11

Exhibit 39-3
  
-Refer to Exhibit 39-3.If P3 is a target price,the total deficiency payment that government makes to farmers is

Accepted Answer

A)  P2 x Q3. 
B)  P3 x Q3. 
C)  (P3 - P1) x Q1. 
D)  (P3 - P1) x Q2. 
E)  (P3 - P2) x Q3. 
A)  P2 x Q3. 
B)  P3 x Q3. 
C)  (P3 - P1) x Q1. 
D)  (P3 - P1) x Q2. 
E)  (P3 - P2) x Q3.

Question 12

Which of the following increases the quantity supplied of agricultural goods?

Accepted Answer

A)  acreage allotments 
B)  assigning market quotas 
C)  agricultural price supports 
D)  a, b, and c 
A)  acreage allotments 
B)  assigning market quotas 
C)  agricultural price supports 
D)  a, b, and c

Question 13

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Accepted Answer

A)  $39,600. 
B)  $43,000. 
C)  $36,550. 
D)  $12,345. 
E)  none of the above 
A)  $39,600. 
B)  $43,000. 
C)  $36,550. 
D)  $12,345. 
E)  none of the above

Question 14

Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price.We would expect that

Accepted Answer

A)  consumers will have to pay a higher price per gallon of milk and will not be able to consume as much as they did before. 
B)  the government will have to purchase the surplus milk on the market and then find a means of storing this milk. 
C)  the dairy farmers will enjoy a higher standard of living at the expense of taxpayers and consumers. 
D)  all of the above 
A)  consumers will have to pay a higher price per gallon of milk and will not be able to consume as much as they did before. 
B)  the government will have to purchase the surplus milk on the market and then find a means of storing this milk. 
C)  the dairy farmers will enjoy a higher standard of living at the expense of taxpayers and consumers. 
D)  all of the above

Question 15

When the government institutes a target price,

Accepted Answer

A)  a surplus is created. 
B)  consumers must pay the target price. 
C)  the farmer receives a deficiency payment if the market price is below the target price. 
D)  the farmer receives a deficiency payment if the market price is above the target price. 
E)  all of the above 
A)  a surplus is created. 
B)  consumers must pay the target price. 
C)  the farmer receives a deficiency payment if the market price is below the target price. 
D)  the farmer receives a deficiency payment if the market price is above the target price. 
E)  all of the above

Question 16

Suppose the price elasticity of demand of for soy beans is 0.85. When the price of soybeans rises by 20 percent,the quantity demanded of soybeans falls by approximately _____________ percent.

Accepted Answer

A)  0.024 
B)  26.67 
C)  23.53 
D)  17.00 
A)  0.024 
B)  26.67 
C)  23.53 
D)  17.00

Question 17

Supply-restricting policies are intended to __________ prices and __________ farmers' revenues.

Accepted Answer

A)  lower; increase 
B)  lower; reduce 
C)  raise; increase 
D)  raise; reduce 
A)  lower; increase 
B)  lower; reduce 
C)  raise; increase 
D)  raise; reduce

Question 18

Exhibit 39-4
  
-Refer to Exhibit 39-4.At the government-established support price of $5 per bushel,the wheat surplus that government buys equals

Accepted Answer

A)  600 bushels. 
B)  400 bushels. 
C)  200 bushels. 
D)  0 bushels. 
A)  600 bushels. 
B)  400 bushels. 
C)  200 bushels. 
D)  0 bushels.

Question 19

The acreage allotment program involves

Accepted Answer

A)  no direct payments to farmers. 
B)  direct payments to farmers. 
C)  the government leasing land to farmers that is to be cultivated by the farmers. 
D)  the government leasing land from farmers that is to be cultivated by the government. 
E)  none of the above 
A)  no direct payments to farmers. 
B)  direct payments to farmers. 
C)  the government leasing land to farmers that is to be cultivated by the farmers. 
D)  the government leasing land from farmers that is to be cultivated by the government. 
E)  none of the above

Question 20

For farmers as a group,increased productivity can lead to lower incomes.

Accepted Answer

A) True 
 B)False

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

The change in the price of a foodstuff will be greater,

Which of the following combinations of factors comes closest to describing the situation in agriculture?

Which of the following directly (as opposed to indirectly)raises the price of agricultural products?

Which of the following best describes the agricultural sector for much of the 20th century and today?

Exhibit 39-4 -Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

If we assume that the income elasticity of demand for food has been around 0.2 and that agricultural producers have become increasingly more productive,we can conclude that

If the demand curve for agricultural products is inelastic,then it would be in the best interest of farmers as a group to

Increased productivity in agriculture leads to lower prices for consumers and higher revenues for farmers.

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P1,consumers will end up paying a price of

Which of the following is not an effect of an agricultural price support?

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a target price,the total deficiency payment that government makes to farmers is

Which of the following increases the quantity supplied of agricultural goods?

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price.We would expect that

When the government institutes a target price,

Suppose the price elasticity of demand of for soy beans is 0.85. When the price of soybeans rises by 20 percent,the quantity demanded of soybeans falls by approximately _____________ percent.

Supply-restricting policies are intended to __________ prices and __________ farmers' revenues.

Exhibit 39-4 -Refer to Exhibit 39-4.At the government-established support price of $5 per bushel,the wheat surplus that government buys equals

The acreage allotment program involves

For farmers as a group,increased productivity can lead to lower incomes.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Filters

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P₁,consumers will end up paying a price of

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a target price,the total deficiency payment that government makes to farmers is

Supply-restricting policies are intended to prices and farmers' revenues.