Deck 32: Farm Policy

Question 1

When the government wishes to help producers of goods (such as farmers)they can enact a law establishing a _____, which economists call a price floor.

A)minimum price
B)maximum price
C)market equilibrium price
D)lost price

Answer 1

A

Question 2

Between 1974 and 2006 milk prices

A)rose far faster than inflation.
B)rose far slower than inflation.
C)rose at about the overall rate of inflation.
D)remained largely constant even in nominal terms.

Answer 2

D

Question 3

If you want to compare the price of a good through time you need to

A)just graph its price.
B)compare it to how other prices changed using price indexes.
C)see if it is higher than the overall CPI.
D)see if it is lower than the overall CPI.

Answer 3

B

Question 4

Viewed from the perspective of a U.S. corn farmer, gasoline price variability can be viewed as a source of

A)demand variability.
B)supply variability.
C)static variability.
D)demand and supply variability.

Question 5

Between 2006 and 2013 prices for food commodities

A)rose far faster than inflation.
B)rose far slower than inflation.
C)rose at about the overall rate of inflation.
D)remained largely constant even in nominal terms.

Question 6

When the government wishes to help producers of goods (such as farmers)by establishing the minimum price at which their good can be sold, economists call this a

A)price ceiling.
B)price statement.
C)price floor.
D)alternative price.

Question 7

A price support on agricultural products is labeled by economists as a

A)price limit.
B)price floor.
C)price ceiling.
D)just price.

Question 8

If the market price for a crop is $4.00 a bushel and the price support is $3.00, then raising the price support to $3.50

A)will cause nothing to happen.
B)will cause the price received by farmers to rise.
C)will cause the price received by farmers to fall.
D)will cause the price paid by consumers to rise.

Question 9

Viewed from the perspective of a U.S. farmer, weather variability in other exporting countries can be viewed as

A)demand variability.
B)supply variability.
C)static variability.
D)demand and supply variability.

Question 10

Between 2006 and 2013 corn prices

A)rose far faster than inflation.
B)rose far slower than inflation.
C)rose at about the overall rate of inflation.
D)remained largely constant even in nominal terms.

Question 11

Between 1974 and 2006 prices for food commodities

A)rose far faster than inflation.
B)rose far slower than inflation.
C)rose at about the overall rate of inflation.
D)Remained largely constant even in nominal terms.

Question 12

For price variability in agricultural crops, U.S. weather related issues fall under the category of

A)demand variability.
B)supply variability.
C)static variability.
D)demand and supply variability.

Question 13

A justification for government price supports on agricultural products that economists generally accept as potentially legitimate is

A)the market is unfair to poor farmers.
B)the market punishes innovation.
C)the price variability needs to be dampened.
D)the market favors milk producers.

Question 14

If order to be relevant the price floor must be

A)at equilibrium.
B)above equilibrium.
C)within 10% of equilibrium (either way).
D)below equilibrium.

Question 15

The primary reason that supply variability can have a significant impact on price is that

A)demand for agricultural products tends to be elastic.
B)demand for agricultural products tends to be inelastic.
C)supply for agricultural products tends to be elastic.
D)supply for agricultural products tends to be inelastic.

Question 16

The primary source(s)of price variability is

A)demand variability.
B)unemployment.
C)supply variability.
D)demand and supply variability.

Question 17

Viewed from the perspective of a U.S. beef farmer, gasoline price variability can be viewed as a source of

A)demand variability, because an increase in gasoline costs drive up corn costs and corn is what farmers feed their cattle.
B)supply variability, because an increase in gasoline costs drive up corn costs and corn is what farmers feed their cattle.
C)static variability.
D)demand and supply variability, because an increase in gasoline costs drive up corn costs and corn is what farmers feed their cattle.

Question 18

Between 1974 and 2006 hog prices

A)rose far faster than inflation.
B)rose far slower than inflation.
C)rose at about the overall rate of inflation.
D)remained largely constant even in nominal terms.

Question 19

The primary means by which a farmer can protect against weather related crop failure is with

A)overtime labor.
B)crop insurance.
C)bond markets.
D)stock markets.

Question 20

Simply establishing a price floor affects/changes

A)demand and supply.
B)demand and quantity supplied.
C)quantity demanded and quantity supplied.
D)quantity demanded and supply.

Question 21

Agricultural subsidies are generally

A)unpopular with politicians and economists.
B)popular with politicians and economists.
C)popular with politicians and unpopular with economists.
D)popular with economists and unpopular with economists.

Question 22

In Figure 32.1, at the supported price-quantity combination where production is limited, the money consumers pay producers is

A)0ABQ_D
B)0P*CQ*
C)0P_floorBQ_D
D)0HCQ*

Question 23

In Figure 32.1, at the market price-quantity combination, the consumer surplus is

A)AP_floorB
B)P*AC
C)HP*C
D)HP_floorBG

Question 24

In Figure 32.1, at the supported price-quantity combination where production is unlimited, and government buys the excess, the money government pays producers is

A)Q_DBEQ_S
B)0P*CQ*
C)0P_floorBQ_D
D)0HCQ*

Question 25

In Figure 32.1, at the market price-quantity combination where production is limited, the consumer surplus is

A)AP_floorB
B)P*AC
C)HP*C
D)HP_floorBG

Question 26

In Figure 32.1, at the market price-quantity combination, the producer surplus is

A)AP_floorB
B)P*AC
C)HP*C
D)HP_floorBG

Question 27

In Figure 32.1, at the supported price-quantity combination where production is unlimited and the government buys the excess, the producer surplus is

A)AP_floorB
B)P*AC
C)HP*C
D)HP_floorE

Question 28

In Figure 32.1, at the supported price-quantity combination where production is limited, the producer surplus is

A)AP_floorB
B)P*AC
C)HP*C
D)HP_floorBG

Question 29

In Figure 32.1, at the supported price-quantity combination where production is limited, the variable cost to producers is

A)0ABQ_D
B)0HEQS
C)0HGQ_D
D)0HCQ*

Question 30

In Figure 32.1, at the supported price-quantity combination where production is unlimited, and government buys the excess, the money consumers pay producers is\

A)0ABQ_D
B)0P*CQ*
C)0P_floorBQ_D
D)0HCQ*

Question 31

In Figure 32.1, at the market equilibrium price-quantity combination, the money consumers pay producers is

A)0ABQ_D
B)0P*CQ*
C)0P_floorBQ_D
D)0HCQ*

Question 32

In Figure 32.1, at the market price-quantity combination where production is unlimited and the government buys the excess, the consumer surplus is

A)AP_floorB
B)P*AC
C)HP*C
D)Hp_floorBG

Question 33

In Figure 32.1, at the market equilibrium price-quantity combination, the total variable cost to producers is

A)0ABQ_D
B)0HEQS
C)0HGQ_D
D)0HCQ*

Question 34

In Figure 32.1, at the supported price-quantity combination where production is unlimited, and government buys the excess, the variable cost to producers is

A)0ABQ_D
B)0HEQS
C)0HGQ_D
D)0HCQ*

Question 35

In Figure 32.1, at the supported price-quantity combination where production is limited, the value to consumers is

A)0ABQ_D
B)0P*CQ*
C)0P_floorBQ_D
D)0HCQ*

Question 36

If the market price for a crop is $4.00 a bushel and the price support is $3.00, then raising the price support to $5.00

A)will cause nothing to happen.
B)will cause the price received by farmers to fall.
C)will cause the price received by farmers to rise to $4.00.
D)will cause the price received by farmers to rise to $5.00.

Question 37

In Figure 32.1, at the supported price-quantity combination where production is unlimited, and government buys the excess, the value to consumers is

A)0ABQ_D
B)0P*CQ*
C)0P_floorBQ_D
D)0HCQ*

Question 38

The Eau Claire Rule is in place to

A)protect dairy farmers in Wisconsin.
B)ensure low prices to consumers.
C)protect dairy farmers outside Wisconsin.
D)protect foreign dairy farmers.

Question 39

In Figure 32.1, at the market equilibrium price-quantity combination, the value to consumers is

A)0ABQ_D
B)0P*CQ*
C)0P_floorBQD
D)0ACQ*

Question 40

If the market price for a crop is $4.00 a bushel and the price support is $5.00, then dropping the price support to $3.50

A)will cause nothing to happen.
B)will cause the price received by farmers to rise.
C)will cause the price received by farmers to fall to $3.50.
D)will cause the price received by farmers to fall to $4.00.

Question 41

In 2013, the U.S. was supposed to be without price supports for milk and grains, but it spent

A)$73 billion on such price supports.
B)$43 billion on such price supports.
C)$33 billion on such price supports.
D)$13.4 billion on such price supports.

Question 42

In 2007 and 2008, the prices of both corn and soybeans increased sharply because

A)all agricultural grain prices always rise and fall together.
B)corn and soybeans are "alternative outputs."
C)an unseasonably warm spring in the "grain belt" states of Indiana, Illinois and Iowa.
D)unprecedented expansion in all federal government price support programs.

Question 43

Economists are general supporters of farm price support programs as being economically efficiency enhancing.

Question 44

Government can support agricultural prices by

A)subsidizing imports of a particular crop.
B)buying up all output that consumers do not buy at the supported price.
C)making it illegal to consume more than a specified amount.
D)subsidizing imports of a particular crop and buying up all output that consumers do not buy at the supported price.

Question 45

Corn and beef prices are typically linked because

A)they are alternative outputs.
B)corn is an input to beef.
C)corn is a substitute for beef.
D)corn is a complement to beef.

Question 46

The governmental expense of a farm price support tends to diminish as the price of the good rises.

Question 47

Government can support agricultural prices by

A)making it illegal to produce without a government-provided license alone.
B)buying up all output that consumers do not buy at the supported price alone.
C)making it illegal to consume more than a specified amount.
D)making it illegal to produce without a government-provided license and buying up all output that consumers do not buy at the supported price.

Question 48

The degree to which gasoline and corn prices are linked is dependent on

A)consumer tastes for corn.
B)consumer driving habits.
C)how high gasoline prices are, because when they are high, corn-based ethanol becomes a more attractive substitute.
D)government regulators.

Question 49

The governmental expense of a farm price support tends to increase as the price of the good rises.

Question 50

A farm price support that includes a price floor but does not include a program for dealing with the surplus will potentially create problems for farmers than it will solve.

Question 51

In 2007 and 2008 the sharp increase in the price of soybeans reflected primarily

A)the increased demand for corn needed to produce ethanol.
B)increased use of advanced fertilizers by soybean producers.
C)government cash subsidies to soybean producers per ton harvested.
D)an unseasonably warm spring in the soybean-producing states of Indiana, Illinois and Iowa.

Question 52

Corn and poultry prices are typically linked because

A)they are alternative outputs.
B)corn is an input to poultry.
C)corn is a substitute for poultry.
D)corn is a complement to poultry.

Question 53

Farm price supports require that the government buy up surplus goods.

Question 54

In 2008, increased gasoline prices led to increased corn prices, primarily because

A)corn production and gasoline production are both concentrated in the high-cost Midwest.
B)corn oil is a good substitute for gasoline, and ethanol is an essential input to corn production.
C)ethanol is a good substitute for gasoline, and corn is an input to ethanol production.
D)gasoline is a good substitute for corn oil, and corn oil is an input to input to gasoline production.

Question 55

Since, according to the CPI, inflation between 1982 and 2015 was 137 percent

A)a 100% increase in prices of farm products would cut farmers' real incomes by 50%.
B)unchanged prices for farm products would cut farmers' real incomes by 58%.
C)a 50% increase in prices of farm products would cut farmers' real incomes by 50%.
D)farmers' real incomes would fall only if the prices of farm products decreased.

Question 56

In 2009, the U.S. was supposed to be without price supports for milk and grains, but actually spent

A)$75 billion on such price supports.
B)$45 billion on such price supports.
C)$19 billion on such price supports.
D)$1 billion on such price supports.

Question 57

The governmental expense of a farm price support tends to diminish as the price of the good falls.

Question 58

Government can support agricultural prices by

A)paying farmers not to produce in particular fields.
B)lending farmers enough at subsidized interest rates to expand their production.
C)making it illegal to consume more than a specified amount.
D)paying farmers not to produce in particular fields and making it illegal to consume more than a specified amount.

Question 59

The governmental expense of a farm price support tends to increase as the price of the good falls.

Question 60

Farm price supports require price floors.

Question 61

The rapid increase in farmland prices

A)has never happened previously.
B)is similar to the increase in farmland prices in the 1970s and their subsequent collapse in the 1980s.
C)is related to unusually low interest rates in the 2010-2015 period.
D)B and C are both correct.

Question 62

Between 1994 and 2015 farmland prices were

A)Closely related to commodity (particularly corn and soybean)prices.
B)Curiously unrelated to commodity (particularly corn and soybean)prices.
C)decreasing slowly.
D)decreasing sharply.

Question 63

Between 1994 and 2015 farmland prices were

A)largely stable.
B)increasing sharply.
C)decreasing slowly.
D)decreasing sharply.