Deck 14: Farm Policy

Question 1

Primary drivers behind the level of agricultural output in the U.S.are all of the following except

A)labor-saving processes.
B)technological innovations.
C)improved crop and livestock techniques.
D)subsidies from the U.S.government.

Answer 1

D

Question 2

Reference: Use the graph below to answer questions 16-21.
Refer to the graph of an agricultural product.With the price support in place the producer surplus is represented by the area of

A)P₀FA
B)P₁FB
C)GP₀A
D)P₁BHG

Answer 2

D

Question 3

Reference: Use the graph below to answer questions 16-21.
Refer to the graph of an agricultural product.With the price support enacted the consumer surplus is represented by the area of

A)P₀FA
B)P₁FB
C)GP₀A
D)P₁BHG

Answer 3

B

Question 4

Demand factors of the agricultural markets include

A)population size and incomes of consumers.
B)population size and age of consumers.
C)incomes of consumers and consumer preferences.
D)incomes of consumers and prices of related goods.

Question 5

A contributing factor for the change in the number of farms has been

A)increased specialization in agricultural production.
B)improved technology.
C)greater advances in farming techniques.
D)the advancement of pivot irrigation.

Question 6

Reference: Use the graph below to answer questions 16-21.
Refer to the graph of an agricultural product.Without the price support producer surplus is represented by the area of

A)P₀FA
B)P₁FB
C)GP₀A
D)P₁BHG

Question 7

Which of the following statements is correct?

A)Government agricultural policies are often designed to increase demand and decrease supply of agricultural products.
B)Government agricultural policies are often designed to decrease demand and increase supply of agricultural products.
C)Government agricultural policies are often designed to increase demand and increase supply of agricultural products.
D)Government agricultural policies are often designed to decrease demand and decrease supply of agricultural products.

Question 8

Historically, the number of farms have

A)decreased but the number of workers have increased.
B)decreased and the number of workers have decreased.
C)increased but the number of workers have decreased.
D)increased and the number of workers have increased.

Question 9

Paid to producers, this typically is designed to provides assistance and supplement income.

A)Farm tax
B)Subsidy
C)Price ceiling
D)Price support

Question 10

Components of agricultural policies include all of the following except

A)Price supports
B)Supply restrictions
C)Supply enhancements
D)Income supports

Question 11

Characteristics that have contributed to existing farm policy include the

A)elasticity of the demand for agricultural products.
B)inelasticity of the demand for agricultural products.
C)elasticity of the supply of agricultural products.
D)inelasticity of the supply for agricultural products.

Question 12

A bumper crop of a specific agricultural product will result in

A)lower prices and decreases in total revenue.
B)higher prices and increases in total revenue.
C)lower prices and increases in total revenue.
D)higher prices and decreases in total revenue.

Question 13

As a result of a price support on an agricultural product

A)Consumers will pay a higher price
B)Consumers will pay a lower price
C)Consumers will increase their quantity demanded
D)Consumers will increase their demand

Question 14

Reference: Use the graph below to answer questions 16-21.
Refer to the graph of an agricultural product.A possible price support would be represented by

A)Price P₀
B)Price P₁
C)Price P₂
D)Either Price P₁ or Price P₀

Question 15

Reference: Use the graph below to answer questions 16-21.
Refer to the graph of an agricultural product.Without the price support consumer surplus is represented by the area of

A)P₀FA
B)P₁FB
C)GP₀A
D)P₁BHG

Question 16

Historically, a significant number of current U.S.government involvement in the agricultural industry originated

A)with our founding fathers in the 1800s.
B)in the Great Depression era of the 1930s.
C)due to the stagflation of the 80s.
D)in the economic boom of the 1990s.

Question 17

Which of the following statements is correct?

A)Price supports results in a shortage of the good
B)A subsidy results in an over allocation of resources to farm products
C)Price supports results in an over allocation of resources to farm products
D)Income supports has a direct impact on agricultural production

Question 18

Supply-side explanations for the level of agricultural output in the U.S.today includes

A)technological changes and innovations.
B)increased productivity.
C)increases in the labor force.
D)technological changes and innovations and increased productivity.

Question 19

Demand for agricultural products tend to be

A)relatively price elastic.
B)relatively price inelastic.
C)relatively unitary elastic.
D)perfectly inelastic.

Question 20

Economist estimate that between 1950 and 2000 the average amount of output per hour worked by a farmer was

A)6 times higher in 2000 than in 1950.
B)12 times higher in 2000 than in 1950.
C)18 times higher in 2000 than in 1950.
D)22 times higher in 2000 than in 1950.

Question 21

Advocates of farm programs argue the policies are necessary to

A)Preserve the incomes of traditional family farms and rural communities
B)Stabilize demand
C)Increase supply which allows for higher prices
D)Decrease supply which allows for higher prices

Question 22

Economists estimate that current commodity programs reduce U.S.net income by about $5 billion annually because of

A)Misallocated resources
B)Stagnate farmland prices
C)Higher taxes
D)Increased competitiveness

Question 23

Critics of farm programs cite that they

A)Support large farmers more than smaller farmers
B)Subsidize the producers at the expense of the consumers
C)Restrict competitiveness of U.S.producers
D)All of the above are criticisms of farm programs

Question 24

The type of agricultural policy represented by the above graph is best defined as a

A)price support.
B)supply restriction.
C)demand enhancement.
D)income support.

Question 25

Explain how the supply-side and the demand-side factors work together to generate equilibrium prices and quantity.

Question 26

Acreage controls and soil conservation are programs enacted to

A)Increase elasticity of agricultural products
B)Decrease elasticity of agricultural products
C)Increase supply of agricultural products
D)Decrease supply of agricultural products

Question 27

Explain the effects and impact of a supply restriction on prices and quantity from a government enacted supply restriction.Provide a graph to illustrate your answer.

Question 28

In addition to assisting agricultural producers, this agricultural program is targeted toward low-income groups and foreign countries.

A)Price support
B)Supply restriction
C)Demand enhancement
D)Income support

Question 29

Who are the winners and losers from a price support?

Question 30

The Conservation Reserve Program CRP) is an example of an)

A)price support.
B)supply restriction.
C)demand enhancement.
D)income support.

Question 31

Reference: Use the graph below to answer questions 16-21.
Refer to the graph of an agricultural product.Identify the deadweight loss to society created by the implementation of a price support.

A)Area ABC
B)Area HBA
C)P₀FA
D)P₁FB

Question 32

In recent years, farm household income has __________________ the income of the average U.S.household

A)Fallen behind
B)Equaled
C)Exceeded
D)Replicated

Question 33

As a result of a price support

A)Consumers lose
B)Consumers gain
C)Consumers are not affected by a price support
D)Society gains

Question 34

Farm programs such as those found in the United States

A)Restrict output
B)Cause an inefficient use of resources by over allocating resources to the agricultural industry
C)Increases productivity
D)Cause the relative price of agricultural land to stagnate

Question 35

The Food for Peace program

A)Is a demand enhancement policy designed to assist in the distribution of surplus U.S.agricultural output
B)Is a supply restriction policy designed to assist in the distribution of surplus U.S.agricultural output
C)Is an income support policy designed to assist in the distribution of surplus U.S.agricultural output
D)Is a supply support policy designed to assist in the distribution of surplus U.S.agricultural output

Question 36

Which of the following statements is true?

A)Agricultural programs are largely designed to decrease subsidies to the industry.
B)Approximately half of the agriculture industry in the United States received support from governmental farm programs.
C)The full costs and benefits of agricultural policies and program are easily known and calculated.
D)Agricultural policies and programs primarily generate benefits.