Question 1

Which of the following would, other things equal, reduce the demand for U.S. farm products?

Accepted Answer

A) poorer crops abroad 
B) strong economic growth abroad 
C) improved trade relations with China and Russia 
D) appreciation of the U.S. dollar 
A) poorer crops abroad 
B) strong economic growth abroad 
C) improved trade relations with China and Russia 
D) appreciation of the U.S. dollar

Question 2

Suppose the demand for good X, an agricultural product, is price-inelastic. This means that small variations in the quantity of X produced will be associated with large variations in the

Accepted Answer

A) price of good X. 
B) incomes of consumers of good X. 
C) cost of producing good X. 
D) quantity of good X exchanged. 
A) price of good X. 
B) incomes of consumers of good X. 
C) cost of producing good X. 
D) quantity of good X exchanged.

Question 3

What percentage of their spending do U.S. consumers allocate to food purchases?

Accepted Answer

A) 1 percent. 
B) 7 percent. 
C) 10 percent. 
D) 13 percent. 
A) 1 percent. 
B) 7 percent. 
C) 10 percent. 
D) 13 percent.

Question 4

Define agribusiness.

Accepted Answer

Agribusiness is the portion of

Question 5

In the last six-plus decades (1950-2017)farm employment in the U.S. has been

Accepted Answer

A) increasing both in absolute numbers and as a proportion of the total employment. 
B) increasing in absolute numbers, but declining as a proportion of the total employment. 
C) decreasing both in absolute numbers and as a proportion of the total employment. 
D) decreasing in absolute numbers, but rising as a proportion of the total employment. 
A) increasing both in absolute numbers and as a proportion of the total employment. 
B) increasing in absolute numbers, but declining as a proportion of the total employment. 
C) decreasing both in absolute numbers and as a proportion of the total employment. 
D) decreasing in absolute numbers, but rising as a proportion of the total employment.

Question 6

The agriculture industry includes both farm commodities and food products. Farm commodities are usually sold in

Accepted Answer

A) monopolistically competitive or oligopolistic markets, while food-product markets are highly competitive. 
B) highly competitive markets, while food-product markets are monopolistically competitive or oligopolistic. 
C) monopolistically competitive or oligopolistic markets. 
D) markets dominated by large firms. 
A) monopolistically competitive or oligopolistic markets, while food-product markets are highly competitive. 
B) highly competitive markets, while food-product markets are monopolistically competitive or oligopolistic. 
C) monopolistically competitive or oligopolistic markets. 
D) markets dominated by large firms.

Question 7

Many members of Congress who represent urban low-income areas vote in favor of farm subsidies. In return, many representatives of agricultural areas support programs such as food stamps, which provide benefits for the urban poor. This situation would be an example of

Accepted Answer

A) confusing symptoms with causes. 
B) misguided subsidies. 
C) rent-seeking behavior. 
D) political logrolling. 
A) confusing symptoms with causes. 
B) misguided subsidies. 
C) rent-seeking behavior. 
D) political logrolling.

Question 8

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

Accepted Answer

A) are consistent with free world trade in agricultural products. 
B) cause a misallocation of agricultural resources internationally. 
C) cause the United States and the European Union to underproduce, while other nations overproduce, farm products. 
D) raise productivity in developing nations. 
A) are consistent with free world trade in agricultural products. 
B) cause a misallocation of agricultural resources internationally. 
C) cause the United States and the European Union to underproduce, while other nations overproduce, farm products. 
D) raise productivity in developing nations.

Question 9

Refer to the demand graph for a farm product. It suggests that farmers' revenues or incomes tend to

Accepted Answer

A) fall when the demand for the farm product increases. 
B) fall when the supply of the farm product increases. 
C) increase when the supply of the farm product increases. 
D) be constant when supply of the farm product changes. 
A) fall when the demand for the farm product increases. 
B) fall when the supply of the farm product increases. 
C) increase when the supply of the farm product increases. 
D) be constant when supply of the farm product changes.

Question 10

The federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996.

Accepted Answer

A) True 
 B)False

Question 11

A parity ratio of 0.6 in year A means that prices

Accepted Answer

A) received in year A could buy 60 percent as much as prices received in the base period. 
B) received in the base period could buy 60 percent as much as prices received in year A. 
C) received in year A had risen by 60 percent over the prices received in the base period. 
D) paid by farmers in year A had risen by 60 percent over the prices paid in the base period. 
A) received in year A could buy 60 percent as much as prices received in the base period. 
B) received in the base period could buy 60 percent as much as prices received in year A. 
C) received in year A had risen by 60 percent over the prices received in the base period. 
D) paid by farmers in year A had risen by 60 percent over the prices paid in the base period.

Question 12

Refer to the diagram. Which of the following supply and demand shifts portray the long-run problem that farms face?

Accepted Answer

A) S to S' and D to D' 
B) S to S' and D' to D 
C) S' to S and D' to D 
D) S' to S and D to D' 
A) S to S' and D to D' 
B) S to S' and D' to D 
C) S' to S and D' to D 
D) S' to S and D to D'

Question 13

Which of the following arguments for farm subsidies is most closely associated with the parity concept?

Accepted Answer

A) Although farmers produce necessities for the rest of us, they receive low incomes that are declining in real terms and should therefore receive price and income support. 
B) Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms. 
C) Farmers cannot fully insure themselves against the risks unusual to farming, such as floods, droughts, and pests. 
D) The "family farm" is an American institution that should be protected and nurtured. 
A) Although farmers produce necessities for the rest of us, they receive low incomes that are declining in real terms and should therefore receive price and income support. 
B) Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms. 
C) Farmers cannot fully insure themselves against the risks unusual to farming, such as floods, droughts, and pests. 
D) The "family farm" is an American institution that should be protected and nurtured.

Question 14

Federal food distribution programs, such as the food stamp program, represent efforts to

Accepted Answer

A) increase supplies of agricultural commodities. 
B) increase demand for agricultural commodities. 
C) decrease the value of farming to the nation. 
D) facilitate the movement of people from farms to cities. 
A) increase supplies of agricultural commodities. 
B) increase demand for agricultural commodities. 
C) decrease the value of farming to the nation. 
D) facilitate the movement of people from farms to cities.

Question 15

The food-stamp program is designed to

Accepted Answer

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

Question 16

Acreage allotment programs were designed to

Accepted Answer

A) reduce the supply of agricultural products. 
B) make the demand for farm products more price elastic. 
C) bolster the demand for agricultural commodities. 
D) accelerate the movement of human resources out of farming. 
A) reduce the supply of agricultural products. 
B) make the demand for farm products more price elastic. 
C) bolster the demand for agricultural commodities. 
D) accelerate the movement of human resources out of farming.

Question 17

Refer to the table. If government adopts a price support program that sets the price at $8, then there will be a

Accepted Answer

A) shortage of 100 bushels. 
B) surplus of 100 bushels. 
C) surplus of 200 bushels. 
D) surplus of 300 bushels. 
A) shortage of 100 bushels. 
B) surplus of 100 bushels. 
C) surplus of 200 bushels. 
D) surplus of 300 bushels.

Question 18

If in a certain year the indices of prices received and paid by farmers were 115 and 142, respectively, the parity ratio (in percentage terms)would be approximately

Accepted Answer

A) 123. 
B) 81. 
C) 69. 
D) 27. 
A) 123. 
B) 81. 
C) 69. 
D) 27.

Question 19

If price supports are established and producers are producing more than consumers want to buy at that price, to maintain producers' income the government will have to

Accepted Answer

A) reduce price supports. 
B) increase price supports. 
C) buy the surplus. 
D) restrict output. 
A) reduce price supports. 
B) increase price supports. 
C) buy the surplus. 
D) restrict output.

Question 20

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because

Accepted Answer

A) they distort domestic and world agricultural prices. 
B) they inhibit technological progress in agriculture. 
C) production and trade occur on the basis of comparative advantage. 
D) price supports are set below market-clearing levels. 
A) they distort domestic and world agricultural prices. 
B) they inhibit technological progress in agriculture. 
C) production and trade occur on the basis of comparative advantage. 
D) price supports are set below market-clearing levels.

Exam 22: Agriculture: Economics and Policy

Which of the following would, other things equal, reduce the demand for U.S. farm products?

Suppose the demand for good X, an agricultural product, is price-inelastic. This means that small variations in the quantity of X produced will be associated with large variations in the

What percentage of their spending do U.S. consumers allocate to food purchases?

Define agribusiness.

In the last six-plus decades (1950-2017)farm employment in the U.S. has been

The agriculture industry includes both farm commodities and food products. Farm commodities are usually sold in

Many members of Congress who represent urban low-income areas vote in favor of farm subsidies. In return, many representatives of agricultural areas support programs such as food stamps, which provide benefits for the urban poor. This situation would be an example of

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

Refer to the demand graph for a farm product. It suggests that farmers' revenues or incomes tend to

The federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996.

A parity ratio of 0.6 in year A means that prices

Refer to the diagram. Which of the following supply and demand shifts portray the long-run problem that farms face?

Which of the following arguments for farm subsidies is most closely associated with the parity concept?

Federal food distribution programs, such as the food stamp program, represent efforts to

The food-stamp program is designed to

Acreage allotment programs were designed to

Refer to the table. If government adopts a price support program that sets the price at $8, then there will be a

If in a certain year the indices of prices received and paid by farmers were 115 and 142, respectively, the parity ratio (in percentage terms)would be approximately

If price supports are established and producers are producing more than consumers want to buy at that price, to maintain producers' income the government will have to

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because

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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