Question 1

Technological advances have occurred throughout the history of agriculture, resulting in higher productivity but lower incomes to farmers.

Accepted Answer

A) True 
 B)False

Question 2

The use of price-support programs in agriculture has hastened the exodus of resources from agriculture.

Accepted Answer

A) True 
 B)False

Question 3

The demand for agricultural products rises less rapidly than income. This means that the demand for agricultural products is

Accepted Answer

A) income inelastic. 
B) income elastic. 
C) price inelastic. 
D) price elastic. 
A) income inelastic. 
B) income elastic. 
C) price inelastic. 
D) price elastic.

Question 4

Through the Freedom to Farm Act of 1996, farmers were

Accepted Answer

A) guaranteed declining annual "transition payments" through 2002. 
B) given higher price supports for a larger number of agricultural products. 
C) protected by tariffs on imported agricultural products after 2002. 
D) allowed to consolidate smaller farms with larger farms to make farming more efficient. 
A) guaranteed declining annual "transition payments" through 2002. 
B) given higher price supports for a larger number of agricultural products. 
C) protected by tariffs on imported agricultural products after 2002. 
D) allowed to consolidate smaller farms with larger farms to make farming more efficient.

Question 5

Between 2010 and 2018, U.S. farmers received yearly direct subsidies from the federal government averaging about

Accepted Answer

A) $12 billion. 
B) $20 billion. 
C) $16 billion. 
D) $40 billion. 
A) $12 billion. 
B) $20 billion. 
C) $16 billion. 
D) $40 billion.

Question 6

If the demand for an agricultural product is inelastic, a bumper crop will

Accepted Answer

A) raise price and decrease total revenues. 
B) raise price and increase total revenues. 
C) lower price and decrease total revenues. 
D) lower price and increase total revenues. 
A) raise price and decrease total revenues. 
B) raise price and increase total revenues. 
C) lower price and decrease total revenues. 
D) lower price and increase total revenues.

Question 7

Agricultural risk coverage guarantees payments to farmers when the price of their crop falls below a specific value.

Accepted Answer

A) True 
 B)False

Question 8

Because government price supports cause surplus production, government policies have been designed to

Accepted Answer

A) increase demand and decrease supply of farm products. 
B) decrease demand and increase supply of farm products. 
C) increase demand and increase supply of farm products. 
D) decrease demand and decrease supply of farm products. 
A) increase demand and decrease supply of farm products. 
B) decrease demand and increase supply of farm products. 
C) increase demand and increase supply of farm products. 
D) decrease demand and decrease supply of farm products.

Question 9

Which statement best characterizes the long-run decline in the agricultural industry?

Accepted Answer

A) The growth in the demand for farm products has exceeded the growth in the supply of such products, causing rising farm product prices and falling farm income. 
B) The growth in the supply of farm products has exceeded the growth in the demand for such products, causing falling farm product prices and falling farm income. 
C) The supply of farm products has increased while the demand for such products has decreased, causing falling farm product prices and falling farm income. 
D) The demand for farm products has increased while the supply of such products has decreased, causing rising farm product prices and rising farm income. 
A) The growth in the demand for farm products has exceeded the growth in the supply of such products, causing rising farm product prices and falling farm income. 
B) The growth in the supply of farm products has exceeded the growth in the demand for such products, causing falling farm product prices and falling farm income. 
C) The supply of farm products has increased while the demand for such products has decreased, causing falling farm product prices and falling farm income. 
D) The demand for farm products has increased while the supply of such products has decreased, causing rising farm product prices and rising farm income.

Question 10

Discuss the two new types of crop insurance programs which were introduced in the Agricultural Act of 2014.

Accepted Answer

With price loss coverage, farmers who pa

Question 11

The government's promotion of greater production and use of corn-based ethanol was intended to

Accepted Answer

A) reduce the price of ethanol-blended gasoline. 
B) bolster the demand for corn. 
C) reduce the surplus supply of corn. 
D) increase the importation of ethanol. 
A) reduce the price of ethanol-blended gasoline. 
B) bolster the demand for corn. 
C) reduce the surplus supply of corn. 
D) increase the importation of ethanol.

Question 12

It is estimated that the price elasticity coefficient for farm products is 0.2. Therefore, in order for consumers to increase their purchases of farm products by 10 percent, the prices of these products would have to fall

Accepted Answer

A) 20 percent. 
B) 40 percent. 
C) 50 percent. 
D) 80 percent. 
A) 20 percent. 
B) 40 percent. 
C) 50 percent. 
D) 80 percent.

Question 13

What has been the rationale made over the years to justify government subsidies for agriculture?

Accepted Answer

Justification of government subsidies ov

Question 14

What are the major economic effects on output, prices, and farmers' income from government price supports that set minimum prices for farm products?

Accepted Answer

The use of price floors or price support

Question 15

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. The triangular area defined by points B and C and the intersection of the supply and demand curve represents the

Accepted Answer

A) parity ratio. 
B) taxpayers' burden. 
C) efficiency gain. 
D) efficiency loss. 
A) parity ratio. 
B) taxpayers' burden. 
C) efficiency gain. 
D) efficiency loss.

Question 16

Which of the following statements best describes the demand for agricultural commodities?

Accepted Answer

A) It takes a small decline in price to induce a large increase in the amount of agricultural products demanded. 
B) The marginal utility of additional units of agricultural output diminishes very rapidly. 
C) Small increases in income cause demand to increase by a proportionately larger amount. 
D) When price declines, the resulting substitution effect is very large. 
A) It takes a small decline in price to induce a large increase in the amount of agricultural products demanded. 
B) The marginal utility of additional units of agricultural output diminishes very rapidly. 
C) Small increases in income cause demand to increase by a proportionately larger amount. 
D) When price declines, the resulting substitution effect is very large.

Question 17

Discuss the criticism of the parity concept.

Accepted Answer

Economists have rejected the parity conc

Question 18

Recent government policies to provide price and income subsidies in agriculture are economically inefficient because they

Accepted Answer

A) increase the interest costs for farmers. 
B) maintain high production levels for farm products. 
C) limit the adoption of new technology to increase output. 
D) give control over production and prices to a few, large agribusinesses. 
A) increase the interest costs for farmers. 
B) maintain high production levels for farm products. 
C) limit the adoption of new technology to increase output. 
D) give control over production and prices to a few, large agribusinesses.

Question 19

A significant reason that increases in demand for agricultural products have been relatively small is because increases in the

Accepted Answer

A) population of the United States have been greater than increases in the productivity of agriculture. 
B) population of the United States have been greater than decreases in the productivity of agriculture. 
C) incomes of U.S. consumers result in more than proportionate increases in their spending on agricultural products. 
D) incomes of U.S. consumers result in less than proportionate increases in their spending on agricultural products. 
A) population of the United States have been greater than increases in the productivity of agriculture. 
B) population of the United States have been greater than decreases in the productivity of agriculture. 
C) incomes of U.S. consumers result in more than proportionate increases in their spending on agricultural products. 
D) incomes of U.S. consumers result in less than proportionate increases in their spending on agricultural products.

Question 20

What is the reason why large, short-run declines in farm prices do not significantly reduce farm production in the short run?

Accepted Answer

A) Farmers' variable costs are high compared with their fixed costs. 
B) Farmers' fixed costs are high compared with their variable costs. 
C) Farmers' prices received are greater than prices paid for agricultural products. 
D) Farmers' prices paid are greater than prices received for agricultural products. 
A) Farmers' variable costs are high compared with their fixed costs. 
B) Farmers' fixed costs are high compared with their variable costs. 
C) Farmers' prices received are greater than prices paid for agricultural products. 
D) Farmers' prices paid are greater than prices received for agricultural products.

Exam 22: Agriculture: Economics and Policy

Technological advances have occurred throughout the history of agriculture, resulting in higher productivity but lower incomes to farmers.

The use of price-support programs in agriculture has hastened the exodus of resources from agriculture.

The demand for agricultural products rises less rapidly than income. This means that the demand for agricultural products is

Through the Freedom to Farm Act of 1996, farmers were

Between 2010 and 2018, U.S. farmers received yearly direct subsidies from the federal government averaging about

If the demand for an agricultural product is inelastic, a bumper crop will

Agricultural risk coverage guarantees payments to farmers when the price of their crop falls below a specific value.

Because government price supports cause surplus production, government policies have been designed to

Which statement best characterizes the long-run decline in the agricultural industry?

Discuss the two new types of crop insurance programs which were introduced in the Agricultural Act of 2014.

The government's promotion of greater production and use of corn-based ethanol was intended to

It is estimated that the price elasticity coefficient for farm products is 0.2. Therefore, in order for consumers to increase their purchases of farm products by 10 percent, the prices of these products would have to fall

What has been the rationale made over the years to justify government subsidies for agriculture?

What are the major economic effects on output, prices, and farmers' income from government price supports that set minimum prices for farm products?

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. The triangular area defined by points B and C and the intersection of the supply and demand curve represents the

Which of the following statements best describes the demand for agricultural commodities?

Discuss the criticism of the parity concept.

Recent government policies to provide price and income subsidies in agriculture are economically inefficient because they

A significant reason that increases in demand for agricultural products have been relatively small is because increases in the

What is the reason why large, short-run declines in farm prices do not significantly reduce farm production in the short run?

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

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