Question 1

Exhibit 39-4 
-Refer to Exhibit 39-4.At the government-established support price of $5 per bushel,the wheat surplus that government buys equals

Accepted Answer

A)   600 bushels.
B)   400 bushels.
C)   200 bushels.
D)   0 bushels. D

Question 2

Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price.We would expect that

Accepted Answer

A)   consumers will have to pay a higher price per gallon of milk and will not be able to consume as much as they did before.
B)   the government will have to purchase the surplus milk on the market and then find a means of storing this milk.
C)   the dairy farmers will enjoy a higher standard of living at the expense of taxpayers and consumers.
D)   all of the above D

Question 3

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Accepted Answer

A)   history of production.
B)   income.
C)   location.
D)   b and c
E)   none of the above A

Question 4

Supply-restricting policies are intended to shift the

Accepted Answer

A)   supply curve to the left.
B)   supply curve to the right.
C)   demand curve to the left.
D)   demand curve to the right.
E)   b and d

Question 5

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Accepted Answer

A)   causes prices to fall.
B)   causes prices to rise.
C)   causes prices to remain constant.
D)   may cause prices to rise,fall,or remain the same,depending upon the relative shifts in the supply and demand curves.

Question 6

Agriculture productivity has increased more rapidly in the U.S.than has nonagriculture productivity.

Accepted Answer

A) True 
 B)False

Question 7

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Accepted Answer

A)   $39,600.
B)   $43,000.
C)   $36,550.
D)   $12,345.
E)   none of the above

Question 8

Exhibit 39-9 
-Refer to Exhibit 39-9.Under a price support program,with the price support set at P1,consumers will end up paying a price of

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.
E)   There is not enough information to answer the question.

Question 9

Which of the following is true?

Accepted Answer

A)   In a price support program,consumers end up paying the price support.
B)   In a target price system,consumers end up paying the target price.
C)   In a target price system,the per-unit deficiency payment is equal to the difference between the quantity demanded at the market price and the quantity supplied at the market price.
D)   Acreage allotment programs directly (as opposed to indirectly) raise agricultural product prices.
E)   b and d

Question 10

If real income rises in the economy and,at the same time,productivity in the agriculture sector rises,too,then it follows that the demand for food will

Accepted Answer

A)   rise (assuming that income elasticity of demand for food is greater than 1) and the supply of food will remain constant.
B)   rise (assuming that income elasticity of demand for food is greater than 0) and the supply of food will increase,too.
C)   fall (assuming that income elasticity of demand for food is greater than 1) and the supply of food will fall,too.
D)   fall (assuming that income elasticity of demand for food is equal to 1) and the supply of food will rise.
E)   none of the above

Question 11

The price elasticity of demand for many agricultural products is (absolute value)less than 1,meaning that these products are inelastic in demand.

Accepted Answer

A) True 
 B)False

Question 12

The price of a foodstuff falls and the total revenue (received by farmers for selling the foodstuff)rises.What could explain this?

Accepted Answer

A)   Increased supply and elastic demand.
B)   Real income rises and the foodstuff is an inferior good.
C)   Real income rises and the foodstuff is a normal good.
D)   Increased supply and inelastic demand.
E)   none of the above

Question 13

If the demand for a particular farm product is inelastic between price P1 and P2 (where P2 > P1),farmers as a group would want to sell their product at the

Accepted Answer

A)   higher price,but an individual farmer would rather sell his product at the lower price.
B)   higher price,and an individual farmer would rather sell his product at the higher price,too.
C)   lower price,but an individual farmer would rather sell his product at the higher price.
D)   lower price,and an individual farmer would rather sell his product at the lower price,too.

Question 14

Supply of a food item increases by more than the demand for the food item increases.One thing for certain is that

Accepted Answer

A)   the price of the food item rises.
B)   income elasticity of demand is less than 0.
C)   the supply curve is price inelastic.
D)   real income falls as a result.
E)   none of the above

Question 15

Which of the following best describes the agricultural sector for much of the 20th century and today?

Accepted Answer

A)   high productivity,price elasticity of demand less than 1,income elasticity of demand greater than 1
B)   low productivity,price elasticity of demand greater than 1,income elasticity of demand less than 1
C)   high productivity,price elasticity of demand less than 1,income elasticity of demand less than 1
D)   low productivity,price elasticity of demand less than 1,income elasticity of demand greater than 1

Question 16

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

Accepted Answer

A)   marketing quota system.
B)   acreage allotment program.
C)   price support program.
D)   target price system.

Question 17

Exhibit 39-3 
-Refer to Exhibit 39-3.If P3 is a target price,the deficiency payment per unit is

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P3 - P1.
E)   P3 - P2.

Question 18

Increased productivity in the agricultural sector is not always a benefit to farmers because it is accompanied by

Accepted Answer

A)   lower prices and if demand is inelastic,lower prices mean lower revenues.
B)   higher prices and if demand is elastic,higher prices mean lower revenues.
C)   lower prices and if demand is elastic,lower prices mean lower revenues.
D)   higher prices and if demand is inelastic,higher prices mean lower revenues.

Question 19

When the government institutes a target price,

Accepted Answer

A)   a surplus is created.
B)   consumers must pay the target price.
C)   the farmer receives a deficiency payment if the market price is below the target price.
D)   the farmer receives a deficiency payment if the market price is above the target price.
E)   all of the above

Question 20

Exhibit 39-4 
-Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

Accepted Answer

A)   0
B)   200
C)   700
D)   900

Exam 27: Agriculture: Problems, policies, and Unintended Effects

Exhibit 39-4 -Refer to Exhibit 39-4.At the government-established support price of $5 per bushel,the wheat surplus that government buys equals

Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price.We would expect that

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Supply-restricting policies are intended to shift the

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Agriculture productivity has increased more rapidly in the U.S.than has nonagriculture productivity.

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P₁,consumers will end up paying a price of

Which of the following is true?

If real income rises in the economy and,at the same time,productivity in the agriculture sector rises,too,then it follows that the demand for food will

The price elasticity of demand for many agricultural products is (absolute value)less than 1,meaning that these products are inelastic in demand.

The price of a foodstuff falls and the total revenue (received by farmers for selling the foodstuff) rises.What could explain this?

If the demand for a particular farm product is inelastic between price P₁ and P₂ (where P₂ > P₁) ,farmers as a group would want to sell their product at the

Supply of a food item increases by more than the demand for the food item increases.One thing for certain is that

Which of the following best describes the agricultural sector for much of the 20th century and today?

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a target price,the deficiency payment per unit is

Increased productivity in the agricultural sector is not always a benefit to farmers because it is accompanied by

When the government institutes a target price,

Exhibit 39-4 -Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

Exam 27: Agriculture: Problems, policies, and Unintended Effects

Exhibit 39-4 -Refer to Exhibit 39-4.At the government-established support price of $5 per bushel,the wheat surplus that government buys equals

Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price.We would expect that

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Supply-restricting policies are intended to shift the

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Agriculture productivity has increased more rapidly in the U.S.than has nonagriculture productivity.

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P1,consumers will end up paying a price of

Which of the following is true?

If real income rises in the economy and,at the same time,productivity in the agriculture sector rises,too,then it follows that the demand for food will

The price elasticity of demand for many agricultural products is (absolute value)less than 1,meaning that these products are inelastic in demand.

The price of a foodstuff falls and the total revenue (received by farmers for selling the foodstuff) rises.What could explain this?

If the demand for a particular farm product is inelastic between price P1 and P2 (where P2 > P1) ,farmers as a group would want to sell their product at the

Supply of a food item increases by more than the demand for the food item increases.One thing for certain is that

Which of the following best describes the agricultural sector for much of the 20th century and today?

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a target price,the deficiency payment per unit is

Increased productivity in the agricultural sector is not always a benefit to farmers because it is accompanied by

When the government institutes a target price,

Exhibit 39-4 -Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P₁,consumers will end up paying a price of

If the demand for a particular farm product is inelastic between price P₁ and P₂ (where P₂ > P₁) ,farmers as a group would want to sell their product at the

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a target price,the deficiency payment per unit is