Question 1

Studies show that,in the United States,

Accepted Answer

A)  price elasticity of demand for agricultural products has hovered around 3.2 for many years. 
B)  as real income has been increasing, the per-capita demand for food has been decreasing. 
C)  as real income has been increasing, the per-capita demand for food has been increasing by much more. 
D)  none of the above 
A)  price elasticity of demand for agricultural products has hovered around 3.2 for many years. 
B)  as real income has been increasing, the per-capita demand for food has been decreasing. 
C)  as real income has been increasing, the per-capita demand for food has been increasing by much more. 
D)  none of the above

Question 2

If income elasticity of demand for food is 1.75 it follows that

Accepted Answer

A)  a 10 percent rise in the price of food lowers the quantity demanded of food by 17.5 percent. 
B)  if income rises by 10 percent, consumption of food rises by 17.5 percent. 
C)  if income rises by 10 percent, consumption of food falls by 17.5 percent. 
D)  a 1 percent rise in the price of food decreases the quantity demanded of food by 1.75 percent. 
E)  none of the above 
A)  a 10 percent rise in the price of food lowers the quantity demanded of food by 17.5 percent. 
B)  if income rises by 10 percent, consumption of food rises by 17.5 percent. 
C)  if income rises by 10 percent, consumption of food falls by 17.5 percent. 
D)  a 1 percent rise in the price of food decreases the quantity demanded of food by 1.75 percent. 
E)  none of the above

Question 3

Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows.

Accepted Answer

To avoid the risk of lower prices in the

Question 4

Increased productivity in the agricultural sector has __________ the output and __________ the prices of agricultural goods.

Accepted Answer

A)  increased; reduced 
B)  increased; increased 
C)  decreased; reduced 
D)  decreased; increased 
E)  had no impact on; had no impact on 
A)  increased; reduced 
B)  increased; increased 
C)  decreased; reduced 
D)  decreased; increased 
E)  had no impact on; had no impact on

Question 5

In general,agricultural price supports

Accepted Answer

A)  raise food prices. 
B)  have no impact on food prices. 
C)  are designed to lower food prices. 
D)  c and d 
A)  raise food prices. 
B)  have no impact on food prices. 
C)  are designed to lower food prices. 
D)  c and d

Question 6

An increase in the supply of corn will lower the total revenue from corn if

Accepted Answer

A)  the demand curve for corn is inelastic between the current and new price of corn. 
B)  the demand curve for corn is elastic between the current and new price of corn. 
C)  there are many substitutes for corn. 
D)  there are only a few substitutes for corn. 
E)  none of the above 
A)  the demand curve for corn is inelastic between the current and new price of corn. 
B)  the demand curve for corn is elastic between the current and new price of corn. 
C)  there are many substitutes for corn. 
D)  there are only a few substitutes for corn. 
E)  none of the above

Question 7

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Accepted Answer

A)  history of production. 
B)  income. 
C)  location. 
D)  b and c 
E)  none of the above 
A)  history of production. 
B)  income. 
C)  location. 
D)  b and c 
E)  none of the above

Question 8

If a farmer rents the land he works on,then any price support or deficiency payments he receives __________ capitalized into the value of that land,and so his economic profit from farming __________.

Accepted Answer

A)  are; goes to zero 
B)  are; remains positive 
C)  are not; goes to zero 
D)  are not; remains positive 
A)  are; goes to zero 
B)  are; remains positive 
C)  are not; goes to zero 
D)  are not; remains positive

Question 9

In agriculture during much of the 20th century,supply grew more than demand.Which two farm problems are these?

Accepted Answer

A)  the high-productivity problem and the income elasticity problem 
B)  the low-productivity problem and the income inelasticity problem 
C)  the high-productivity problem and the income inelasticity problem 
D)  the low-productivity problem and the income elasticity problem 
E)  none of the above 
A)  the high-productivity problem and the income elasticity problem 
B)  the low-productivity problem and the income inelasticity problem 
C)  the high-productivity problem and the income inelasticity problem 
D)  the low-productivity problem and the income elasticity problem 
E)  none of the above

Question 10

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Accepted Answer

A)  a price support. 
B)  an acreage allotment program. 
C)  a target price. 
D)  any of the above 
A)  a price support. 
B)  an acreage allotment program. 
C)  a target price. 
D)  any of the above

Question 11

Exhibit 39-2
  
-Refer to Exhibit 39-2.If P1 is a price support,the cost of the price support program to the government is

Accepted Answer

A)  P1 x Q2. 
B)  P1 x (Q2 - Q0). 
C)  P1 x (Q0 - Q1). 
D)  P1 x (Q2 - Q1). 
E)  none of the above 
A)  P1 x Q2. 
B)  P1 x (Q2 - Q0). 
C)  P1 x (Q0 - Q1). 
D)  P1 x (Q2 - Q1). 
E)  none of the above

Question 12

Exhibit 39-1
  
-Refer to Exhibit 39-1.Given the target price PT,the total deficiency payment made by the government is the area of

Accepted Answer

A)  0P1CQ2. 
B)  0PTBQ2. 
C)  PTBCP1. 
D)  PTBEP2. 
A)  0P1CQ2. 
B)  0PTBQ2. 
C)  PTBCP1. 
D)  PTBEP2.

Question 13

Exhibit 39-2
  
-Refer to Exhibit 39-2.Given a target price of P1,what price does the consumer pay?

Accepted Answer

A)  P1. 
B)  P0. 
C)  P2. 
D)  a price not shown on the diagram. 
A)  P1. 
B)  P0. 
C)  P2. 
D)  a price not shown on the diagram.

Question 14

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions,then

Accepted Answer

A)  price changes are likely to be small, and farm revenues are likely to be highly volatile. 
B)  price changes are likely to be large, and farm revenues are likely to be highly volatile. 
C)  prices are likely to be constant, and farm revenues are likely to be constant. 
D)  prices are likely to be constant, and farm revenues are likely to be highly volatile. 
E)  price changes are likely to be small, and farm revenues are likely to be constant. 
A)  price changes are likely to be small, and farm revenues are likely to be highly volatile. 
B)  price changes are likely to be large, and farm revenues are likely to be highly volatile. 
C)  prices are likely to be constant, and farm revenues are likely to be constant. 
D)  prices are likely to be constant, and farm revenues are likely to be highly volatile. 
E)  price changes are likely to be small, and farm revenues are likely to be constant.

Question 15

When productivity increases in the production of agricultural products,the supply curve for agricultural products shifts rightward.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 39-9
  
-Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Accepted Answer

A)  P2 - P4. 
B)  P1 - P3. 
C)  P2 - P3. 
D)  P1 - P2. 
E)  none of the above 
A)  P2 - P4. 
B)  P1 - P3. 
C)  P2 - P3. 
D)  P1 - P2. 
E)  none of the above

Question 17

A shift of the supply curve for farm products to the right in a price inelastic region of the demand curve for farm products

Accepted Answer

A)  reduces price and total revenue. 
B)  increases price and reduces total revenue. 
C)  reduces price and increases total revenue. 
D)  increases prices and total revenue. 
A)  reduces price and total revenue. 
B)  increases price and reduces total revenue. 
C)  reduces price and increases total revenue. 
D)  increases prices and total revenue.

Question 18

Agricultural price supports refer to

Accepted Answer

A)  minimum prices set by the government on certain farm products. 
B)  maximum prices set by the government on certain farm products. 
C)  supply-restricting policies imposed by the government on certain farm products. 
D)  b and c 
E)  none of the above 
A)  minimum prices set by the government on certain farm products. 
B)  maximum prices set by the government on certain farm products. 
C)  supply-restricting policies imposed by the government on certain farm products. 
D)  b and c 
E)  none of the above

Question 19

Explain how nonrecourse loans operate and how they help to support crop prices.

Accepted Answer

A nonrecourse loan is the major way the

Question 20

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Accepted Answer

A)  causes prices to fall. 
B)  causes prices to rise. 
C)  causes prices to remain constant. 
D)  may cause prices to rise, fall, or remain the same, depending upon the relative shifts in the supply and demand curves. 
A)  causes prices to fall. 
B)  causes prices to rise. 
C)  causes prices to remain constant. 
D)  may cause prices to rise, fall, or remain the same, depending upon the relative shifts in the supply and demand curves.

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

Studies show that,in the United States,

If income elasticity of demand for food is 1.75 it follows that

Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows.

Increased productivity in the agricultural sector has __________ the output and __________ the prices of agricultural goods.

In general,agricultural price supports

An increase in the supply of corn will lower the total revenue from corn if

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

If a farmer rents the land he works on,then any price support or deficiency payments he receives __________ capitalized into the value of that land,and so his economic profit from farming __________.

In agriculture during much of the 20th century,supply grew more than demand.Which two farm problems are these?

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Exhibit 39-2 -Refer to Exhibit 39-2.If P1 is a price support,the cost of the price support program to the government is

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price PT,the total deficiency payment made by the government is the area of

Exhibit 39-2 -Refer to Exhibit 39-2.Given a target price of P1,what price does the consumer pay?

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions,then

When productivity increases in the production of agricultural products,the supply curve for agricultural products shifts rightward.

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

A shift of the supply curve for farm products to the right in a price inelastic region of the demand curve for farm products

Agricultural price supports refer to

Explain how nonrecourse loans operate and how they help to support crop prices.

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

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

Increased productivity in the agricultural sector has the output and the prices of agricultural goods.

If a farmer rents the land he works on,then any price support or deficiency payments he receives capitalized into the value of that land,and so his economic profit from farming .

Exhibit 39-2 -Refer to Exhibit 39-2.If P₁is a price support,the cost of the price support program to the government is

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price P_T,the total deficiency payment made by the government is the area of

Exhibit 39-2 -Refer to Exhibit 39-2.Given a target price of P₁,what price does the consumer pay?

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P₁,the per-unit deficiency payment will be: