Question 1

Refer to the graph. An increase in the price of agricultural products from Pᵦ to Pₐ will

Accepted Answer

A) increase farm incomes by 0 Pₐ AQₐ . 
B) decrease farm incomes by 0 Pᵦ EQₐ . 
C) decrease farm incomes from 0 Pᵦ BQᵦ to 0 Pₐ AQₐ . 
D) increase farm incomes from 0 Pᵦ BQᵦ to 0 Pₐ AQₐ . 
A) increase farm incomes by 0 Pₐ AQₐ . 
B) decrease farm incomes by 0 Pᵦ EQₐ . 
C) decrease farm incomes from 0 Pᵦ BQᵦ to 0 Pₐ AQₐ . 
D) increase farm incomes from 0 Pᵦ BQᵦ to 0 Pₐ AQₐ .

Question 2

Farm share of U.S. GDP has

Accepted Answer

A) declined from about 12 percent in 1950 to 1 percent today. 
B) declined from about 12 percent in 1950 to 7 percent today. 
C) declined from about 7 percent in 1950 to 1 percent today. 
D) remained relatively stable over the past 50 years. 
A) declined from about 12 percent in 1950 to 1 percent today. 
B) declined from about 12 percent in 1950 to 7 percent today. 
C) declined from about 7 percent in 1950 to 1 percent today. 
D) remained relatively stable over the past 50 years.

Question 3

An increase in the supply of farm products relative to the demand for them tends to cause farm incomes to decline.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the graph of the market for wheat. The government adopts a price support program for wheat and supports the wheat price at P ₂. As a result of this price support program,

Accepted Answer

A) there will be a shortage of wheat in the amount of AB. 
B) there will be a surplus of wheat in the amount of Q₁ Q₂. 
C) there will be a surplus of wheat in the amount of Q₀ Q₂. 
D) wheat farmers will receive less total income than if there were no price support program. 
A) there will be a shortage of wheat in the amount of AB. 
B) there will be a surplus of wheat in the amount of Q₁ Q₂. 
C) there will be a surplus of wheat in the amount of Q₀ Q₂. 
D) wheat farmers will receive less total income than if there were no price support program.

Question 5

About 10 percent of the U.S. labor force is in agriculture.

Accepted Answer

A) True 
 B)False

Question 6

The parity ratio initially stood at 0.5. Then after several years, the prices received by farmers doubled while the prices they paid tripled. This will bring the parity ratio to

Accepted Answer

A) 0.25. 
B) 0.33. 
C) 0.75. 
D) 0.8. 
A) 0.25. 
B) 0.33. 
C) 0.75. 
D) 0.8.

Question 7

Which diagram best represents the problem faced by farms in the long run?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

In 2015, Farmer Levi grew only soybeans and received payments under the agricultural risk coverage program of the Agricultural Act of 2014. Which of the following best explains why Farmer Levi received these payments?

Accepted Answer

A) The price of soybeans fell below a specified threshold. 
B) The total revenue of all farmers in the county fell below a specified threshold. 
C) The total revenue by all soybean growers in the county fell below a specified threshold. 
D) The total revenue of all soybean farmers participating in the program fell below a specified threshold. 
A) The price of soybeans fell below a specified threshold. 
B) The total revenue of all farmers in the county fell below a specified threshold. 
C) The total revenue by all soybean growers in the county fell below a specified threshold. 
D) The total revenue of all soybean farmers participating in the program fell below a specified threshold.

Question 9

Farm programs such as those of the United States and the European Union

Accepted Answer

A) encourage the United States and the European Union to use tariffs and quotas to restrict agricultural imports. 
B) cause U.S. and EU farmers to produce less than domestic consumers want to purchase. 
C) increase world market prices for agricultural products. 
D) raise farm output in developing nations. 
A) encourage the United States and the European Union to use tariffs and quotas to restrict agricultural imports. 
B) cause U.S. and EU farmers to produce less than domestic consumers want to purchase. 
C) increase world market prices for agricultural products. 
D) raise farm output in developing nations.

Question 10

An example of the special interest effect is a farm program from which a large group receives small benefits at the expense of a smaller group who individually suffer large losses.

Accepted Answer

A) True 
 B)False

Question 11

The demand for most agricultural products is

Accepted Answer

A) elastic with respect to price but inelastic with respect to income. 
B) inelastic with respect to price but elastic with respect to income. 
C) elastic with respect to both price and income. 
D) inelastic with respect to both price and income. 
A) elastic with respect to price but inelastic with respect to income. 
B) inelastic with respect to price but elastic with respect to income. 
C) elastic with respect to both price and income. 
D) inelastic with respect to both price and income.

Question 12

The ambitious plan to wean American agriculture from subsidies, as embodied in the Freedom to Farm Act of 1996,

Accepted Answer

A) became fully realized by 2000. 
B) unraveled in 1998 and 1999 when farm prices fell. 
C) was not approved by the president. 
D) was extended in 2002. 
A) became fully realized by 2000. 
B) unraveled in 1998 and 1999 when farm prices fell. 
C) was not approved by the president. 
D) was extended in 2002.

Question 13

Approximately what percentage of American consumers' total spending is on food?

Accepted Answer

A) about 10 percent 
B) 20-25 percent 
C) about 30 percent 
D) more than 40 percent 
A) about 10 percent 
B) 20-25 percent 
C) about 30 percent 
D) more than 40 percent

Question 14

Public policy has been ineffective in alleviating the resource misallocation problem in American agriculture.

Accepted Answer

A) True 
 B)False

Question 15

Comparing an acreage allotment program versus a taxpayer-subsidized price-support program, the acreage allotment program

Accepted Answer

A) and the price-support program have similar costs to the taxpayers. 
B) imposes a smaller cost on the taxpayers. 
C) imposes a larger cost on the taxpayers. 
D) does not impose a cost on the consumers. 
A) and the price-support program have similar costs to the taxpayers. 
B) imposes a smaller cost on the taxpayers. 
C) imposes a larger cost on the taxpayers. 
D) does not impose a cost on the consumers.

Question 16

Refer to the graph of the supply and demand for agricultural products. The supply and demand for agricultural products are in initial equilibrium at point 1. Technological progress in agriculture will

Accepted Answer

A) shift D₁ to D₂ and cause farm incomes to fall. 
B) shift S₁ to S₂ and cause farm incomes to fall. 
C) change equilibrium from point 1 to point 2 and cause farm incomes to rise. 
D) change equilibrium from point 1 to point 6 and cause farm incomes to fall. 
A) shift D₁ to D₂ and cause farm incomes to fall. 
B) shift S₁ to S₂ and cause farm incomes to fall. 
C) change equilibrium from point 1 to point 2 and cause farm incomes to rise. 
D) change equilibrium from point 1 to point 6 and cause farm incomes to fall.

Question 17

Which of the following is not a reason to predict that farm subsidies might decline in the future?

Accepted Answer

A) a declining farm population 
B) the special interest effect 
C) pressure to cut the budget deficit 
D) conflicts with free world trade 
A) a declining farm population 
B) the special interest effect 
C) pressure to cut the budget deficit 
D) conflicts with free world trade

Question 18

List at least five of the technological advances over the last half century in agriculture. What are some of the more recent advanced information technologies for farmers?

Accepted Answer

Some of the technological advances in ag

Question 19

If the demand for agricultural products is inelastic, a relatively small increase in supply will cause farm prices and incomes to decline.

Accepted Answer

A) True 
 B)False

Question 20

Which group of farmers benefits the least from price supports in agriculture?

Accepted Answer

A) those farmers receiving the highest average farm-family income 
B) those farmers receiving the midrange average farm-family income 
C) those farmers receiving the lowest average farm-family income 
D) large corporate farms 
A) those farmers receiving the highest average farm-family income 
B) those farmers receiving the midrange average farm-family income 
C) those farmers receiving the lowest average farm-family income 
D) large corporate farms

Exam 22: Agriculture: Economics and Policy

Refer to the graph. An increase in the price of agricultural products from Pᵦ to Pₐ will

Farm share of U.S. GDP has

An increase in the supply of farm products relative to the demand for them tends to cause farm incomes to decline.

Refer to the graph of the market for wheat. The government adopts a price support program for wheat and supports the wheat price at P ₂. As a result of this price support program,

About 10 percent of the U.S. labor force is in agriculture.

The parity ratio initially stood at 0.5. Then after several years, the prices received by farmers doubled while the prices they paid tripled. This will bring the parity ratio to

Which diagram best represents the problem faced by farms in the long run?

In 2015, Farmer Levi grew only soybeans and received payments under the agricultural risk coverage program of the Agricultural Act of 2014. Which of the following best explains why Farmer Levi received these payments?

Farm programs such as those of the United States and the European Union

An example of the special interest effect is a farm program from which a large group receives small benefits at the expense of a smaller group who individually suffer large losses.

The demand for most agricultural products is

The ambitious plan to wean American agriculture from subsidies, as embodied in the Freedom to Farm Act of 1996,

Approximately what percentage of American consumers' total spending is on food?

Public policy has been ineffective in alleviating the resource misallocation problem in American agriculture.

Comparing an acreage allotment program versus a taxpayer-subsidized price-support program, the acreage allotment program

Refer to the graph of the supply and demand for agricultural products. The supply and demand for agricultural products are in initial equilibrium at point 1. Technological progress in agriculture will

Which of the following is not a reason to predict that farm subsidies might decline in the future?

List at least five of the technological advances over the last half century in agriculture. What are some of the more recent advanced information technologies for farmers?

If the demand for agricultural products is inelastic, a relatively small increase in supply will cause farm prices and incomes to decline.

Which group of farmers benefits the least from price supports in agriculture?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters