Question 1

Which of the following statements best describes the parity concept?

Accepted Answer

A) The prices of farm commodities should vary inversely with changes in the prices-paid index for farmers. 
B) Because of productivity increases, farmers are entitled to the same real income for a smaller volume of output. 
C) The money incomes of farmers should always be the same, regardless of increases or decreases in the prices of the products they buy. 
D) The production of a given real output entitles the producer to the same real income over time. 
A) The prices of farm commodities should vary inversely with changes in the prices-paid index for farmers. 
B) Because of productivity increases, farmers are entitled to the same real income for a smaller volume of output. 
C) The money incomes of farmers should always be the same, regardless of increases or decreases in the prices of the products they buy. 
D) The production of a given real output entitles the producer to the same real income over time.

Question 2

The movement to eliminate agricultural subsidies in the U.S. and make farmers rely more on market forces, starting with the Farm Act of 1996, continues to this day.

Accepted Answer

A) True 
 B)False

Question 3

The price elasticity of demand for most agricultural products is relatively low.

Accepted Answer

A) True 
 B)False

Question 4

Price supports

Accepted Answer

A) decrease pollution because participants must practice organic farming. 
B) neither increase nor decrease environmental pollution. 
C) increase pollution because supports encourage the cultivation of marginal land and the use of more pesticides and fertilizers. 
D) discourage rent-seeking activity. 
A) decrease pollution because participants must practice organic farming. 
B) neither increase nor decrease environmental pollution. 
C) increase pollution because supports encourage the cultivation of marginal land and the use of more pesticides and fertilizers. 
D) discourage rent-seeking activity.

Question 5

Which of the following is a major justification for public aid to agriculture in the United States?

Accepted Answer

A) The demand for farm products is income elastic. 
B) Technological progress has greatly reduced the demand for farm products. 
C) Farmers sell their products in highly imperfect markets and buy resources in highly competitive markets. 
D) Farmers are subject to extraordinary hazards that are hard to insure against. 
A) The demand for farm products is income elastic. 
B) Technological progress has greatly reduced the demand for farm products. 
C) Farmers sell their products in highly imperfect markets and buy resources in highly competitive markets. 
D) Farmers are subject to extraordinary hazards that are hard to insure against.

Question 6

Refer to the table. If government adopts a price support program that sets the price at $9, then there will be a

Accepted Answer

A) shortage of 100 bushels. 
B) surplus of 100 bushels. 
C) surplus of 120 bushels. 
D) surplus of 160 bushels. 
A) shortage of 100 bushels. 
B) surplus of 100 bushels. 
C) surplus of 120 bushels. 
D) surplus of 160 bushels.

Question 7

Which of the following statements is correct?

Accepted Answer

A) Price supports may induce either an underallocation or an overallocation of resources to farm products. 
B) Supported prices have no effect on the allocation of resources to farm products. 
C) Supported prices induce an underallocation of resources to farm products. 
D) Price supports induce an overallocation of resources to farm products. 
A) Price supports may induce either an underallocation or an overallocation of resources to farm products. 
B) Supported prices have no effect on the allocation of resources to farm products. 
C) Supported prices induce an underallocation of resources to farm products. 
D) Price supports induce an overallocation of resources to farm products.

Question 8

The concept of parity has provided a rationale for government price supports for farm products.

Accepted Answer

A) True 
 B)False

Question 9

Under the Food, Conservation, and Energy Act of 2008, subsidies to farmers based on gaps between actual prices of crops and targeted prices were called

Accepted Answer

A) direct payments. 
B) price supports. 
C) countercyclical payments. 
D) price gap set-asides. 
A) direct payments. 
B) price supports. 
C) countercyclical payments. 
D) price gap set-asides.

Question 10

If the demand curve for wheat is inelastic, then total farm income from wheat will be

Accepted Answer

A) higher in years of low yields and lower in years of high yields. 
B) lower in years of low yields and higher in years of high yields. 
C) higher in years of falling prices. 
D) lower in years of rising prices. 
A) higher in years of low yields and lower in years of high yields. 
B) lower in years of low yields and higher in years of high yields. 
C) higher in years of falling prices. 
D) lower in years of rising prices.

Question 11

The Agricultural Act of 2018

Accepted Answer

A) repealed all of the crop insurance provisions of the 2014 act. 
B) eliminated the price loss coverage provision of the 2014 act. 
C) changed the 2014 act to allow farmers to select which insurance programs to use each year. 
D) reinstated the price supports that were in place prior to implementation of the Freedom to Farm Act of 1996. 
A) repealed all of the crop insurance provisions of the 2014 act. 
B) eliminated the price loss coverage provision of the 2014 act. 
C) changed the 2014 act to allow farmers to select which insurance programs to use each year. 
D) reinstated the price supports that were in place prior to implementation of the Freedom to Farm Act of 1996.

Question 12

Which of the following arguments is not generally made to justify farm subsidies?

Accepted Answer

A) The "family farm" is an American institution that should be protected and nurtured. 
B) Agribusiness firms need subsidies to achieve economies of scale. 
C) Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms. 
D) Farmers cannot fully insure themselves against the risks unusual to farming, such as floods, droughts, and pests. 
A) The "family farm" is an American institution that should be protected and nurtured. 
B) Agribusiness firms need subsidies to achieve economies of scale. 
C) Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms. 
D) Farmers cannot fully insure themselves against the risks unusual to farming, such as floods, droughts, and pests.

Question 13

Price supports in agriculture have been criticized because they

Accepted Answer

A) have hastened the exodus of labor from agriculture. 
B) subsidize consumers at the expense of farmers. 
C) help large farmers more than small farmers. 
D) create product shortages. 
A) have hastened the exodus of labor from agriculture. 
B) subsidize consumers at the expense of farmers. 
C) help large farmers more than small farmers. 
D) create product shortages.

Question 14

Agriculture is overcrowded because of absolute and relative increases in the size of farm employment.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the diagram. If farmers produce a normal crop of Qₙ , their gross income

Accepted Answer

A) will be 0 Pₚ PNQₙ . 
B) will be 0 Pₙ NQₙ . 
C) will be Pₚ × Qₙ . 
D) cannot be determined. 
A) will be 0 Pₚ PNQₙ . 
B) will be 0 Pₙ NQₙ . 
C) will be Pₚ × Qₙ . 
D) cannot be determined.

Question 16

The major economic problem with recent farm policies is that they provide price and income subsidies that

Accepted Answer

A) are insufficient to keep farmers producing. 
B) increase the demand for farm products. 
C) slow the exodus of resources from agriculture. 
D) limit production to the most profitable products. 
A) are insufficient to keep farmers producing. 
B) increase the demand for farm products. 
C) slow the exodus of resources from agriculture. 
D) limit production to the most profitable products.

Question 17

Which of the following statements about U.S. agriculture is true as it relates to the past several decades?

Accepted Answer

A) The demand for farm products has declined, the supply of farm products has increased, and the price of farm products has declined. 
B) The demand for farm products has become both more income elastic and more price elastic. 
C) Minimum efficient scale has increased, the prices of farm products have declined, and the number of farms has declined. 
D) The prices of farm products have increased, minimum efficient scale has declined, and the supply of farm products has been stagnant. 
A) The demand for farm products has declined, the supply of farm products has increased, and the price of farm products has declined. 
B) The demand for farm products has become both more income elastic and more price elastic. 
C) Minimum efficient scale has increased, the prices of farm products have declined, and the number of farms has declined. 
D) The prices of farm products have increased, minimum efficient scale has declined, and the supply of farm products has been stagnant.

Question 18

Most of the technological advances in U.S. agriculture are initiated by the following, except

Accepted Answer

A) government-sponsored agencies. 
B) farmers. 
C) colleges and universities. 
D) suppliers of farm inputs. 
A) government-sponsored agencies. 
B) farmers. 
C) colleges and universities. 
D) suppliers of farm inputs.

Question 19

If government establishes a system of price supports, it is in effect setting a

Accepted Answer

A) price ceiling. 
B) price floor. 
C) maximum level of output. 
D) minimum level of output. 
A) price ceiling. 
B) price floor. 
C) maximum level of output. 
D) minimum level of output.

Question 20

What are the major provisions of the Freedom to Farm Act of 1996?

Accepted Answer

The Freedom to Farm Act ended price supp

Exam 22: Agriculture: Economics and Policy

Which of the following statements best describes the parity concept?

The movement to eliminate agricultural subsidies in the U.S. and make farmers rely more on market forces, starting with the Farm Act of 1996, continues to this day.

The price elasticity of demand for most agricultural products is relatively low.

Price supports

Which of the following is a major justification for public aid to agriculture in the United States?

Refer to the table. If government adopts a price support program that sets the price at $9, then there will be a

Which of the following statements is correct?

The concept of parity has provided a rationale for government price supports for farm products.

Under the Food, Conservation, and Energy Act of 2008, subsidies to farmers based on gaps between actual prices of crops and targeted prices were called

If the demand curve for wheat is inelastic, then total farm income from wheat will be

The Agricultural Act of 2018

Which of the following arguments is not generally made to justify farm subsidies?

Price supports in agriculture have been criticized because they

Agriculture is overcrowded because of absolute and relative increases in the size of farm employment.

Refer to the diagram. If farmers produce a normal crop of Qₙ , their gross income

The major economic problem with recent farm policies is that they provide price and income subsidies that

Which of the following statements about U.S. agriculture is true as it relates to the past several decades?

Most of the technological advances in U.S. agriculture are initiated by the following, except

If government establishes a system of price supports, it is in effect setting a

What are the major provisions of the Freedom to Farm Act of 1996?

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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