Question 1

During the twentieth century,the U.S.farm sector experienced

Accepted Answer

A)  large increases in its ability to produce output. 
B)  relatively little improvement in its ability to produce output. 
C)  a marked decrease in its ability to produce output. 
D)  relatively stable demand for its output. 
E)  increasing relative prices for its output.

Question 2

Farmers can insure themselves against adverse price swings through the __________ market.

Accepted Answer

A)  bond 
B)  stock 
C)  futures 
D)  food 
E)  none of the above

Question 3

Studies shows that income elasticity of demand for food is

Accepted Answer

A)  less than 1,but greater than 0. 
B)  more than 1,but less than 2. 
C)  less than 0. 
D)  more than 2.

Question 4

Farmers as a group generally prefer bad weather to good weather because bad weather shifts the demand curve for their product rightward and raises the price of their product.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 39-4 
-Refer to Exhibit 39-4.At a target price of $4 per bushel,how much does the private sector spend on wheat?

Accepted Answer

A)  $2,400 
B)  $1,800 
C)  $2,800 
D)  $3,600

Question 6

Exhibit 39-9 
-Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Accepted Answer

A)  P2 - P4. 
B)  P1 - P3. 
C)  P2 - P3. 
D)  P1 - P2. 
E)  none of the above

Question 7

Increased productivity in the agricultural sector has __________ the output and __________ the prices of agricultural goods.

Accepted Answer

A)  increased;reduced 
B)  increased;increased 
C)  decreased;reduced 
D)  decreased;increased 
E)  had no impact on;had no impact on

Question 8

An agricultural price support

Accepted Answer

A)  will create a surplus in the relevant market,assuming the price support is above equilibrium price. 
B)  will create a shortage in the relevant market,assuming the price support is above equilibrium price. 
C)  is an example of a price floor. 
D)  will lead to greater total revenue for farmers if demand (for the product)farmers sell is inelastic between the equilibrium price and the price support (and assuming the price support is above equilibrium price). 
E)  a,c,and d

Question 9

Suppose farmers get together and decide to be less productive.They want to do this so that they can shift the supply curve of farm products leftward and raise the price.They must be assuming that the demand curve between the current price and the higher price is

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  unit elastic. 
D)  There is not enough information to answer this question.

Question 10

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Accepted Answer

A)  a price support. 
B)  an acreage allotment program. 
C)  a target price. 
D)  any of the above

Question 11

A decrease in the supply of an agricultural product will increase the total revenue of farmers if the demand for the agricultural product is

Accepted Answer

A)  income elastic. 
B)  income inelastic. 
C)  price elastic. 
D)  price inelastic. 
E)  none of the above

Question 12

The combination of income elasticity of demand for food and high agricultural productivity leads to the demand for food increasing and the supply of food increasing even more,which has lead to rising prices of food.

Accepted Answer

A) True 
 B)False

Question 13

Bad weather is likely to

Accepted Answer

A)  raise the total revenue farmers receive for their foodstuffs,assuming that demand for their products is inelastic. 
B)  lower the total revenue farmers receive for their foodstuffs,assuming that demand for their products is elastic. 
C)  leave the total revenue farmers receive for their foodstuffs unchanged. 
D)  change the income elasticity of demand for food. 
E)  c and d

Question 14

Stating that income elasticity of demand for potatoes equals 0.15 is equivalent to stating that if income

Accepted Answer

A)  decreases by 10 percent,potato purchases decrease by 1.5 percent. 
B)  increases by 10 percent,potato purchases increase by 15 percent. 
C)  decreases by 1.5 percent,potato purchases decrease by 10 percent. 
D)  increases by 15 percent,potato purchases decrease by 10 percent. 
E)  none of the above

Question 15

Exhibit 39-8 
-Refer to Exhibit 39-8.Assume that E1 represents the initial equilibrium in the market for grain X.If all the farmers agree to restrict production and abide by the agreement,

Accepted Answer

A)  the price of X increases. 
B)  the equilibrium quantity decreases. 
C)  total revenues increase if the demand curve is inelastic between E1 and E3. 
D)  all of the above 
E)  a and b only

Question 16

If the demand curve for agricultural products is inelastic and farmers as a group become more productive,then prices of agricultural goods will __________ and total revenue earned by farmers will __________.

Accepted Answer

A)  decrease;increase 
B)  decrease;decrease 
C)  increase;increase 
D)  increase;decrease 
E)  We cannot answer this question without knowing how inelastic the demand curve is.

Question 17

Exhibit 39-4 
-Refer to Exhibit 39-4.The price elasticity of demand for wheat between the prices of $3 and $4 is

Accepted Answer

A)  equal to 1. 
B)  less than 1. 
C)  greater than 1. 
D)  equal to 100. 
E)  c and d

Question 18

If a farmer rents the land he works on,then any price support or deficiency payments he receives __________ capitalized into the value of that land,and so his economic profit from farming __________.

Accepted Answer

A)  are;goes to zero 
B)  are;remains positive 
C)  are not;goes to zero 
D)  are not;remains positive

Question 19

The demand for farm goods is income inelastic if the percentage change in quantity demanded is __________ the percentage change in __________.

Accepted Answer

A)  greater than;income 
B)  equal to;income 
C)  less than;income 
D)  greater than;revenue 
E)  less than;revenue

Question 20

Under the target price program,

Accepted Answer

A)  the government ends up buying the surplus product that results. 
B)  taxpayers pay the difference between the price consumers pay and the target price. 
C)  deficiency payments are made to both rich and poor farmers. 
D)  the surplus that results is sometimes dumped or otherwise wasted. 
E)  b and c

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

During the twentieth century,the U.S.farm sector experienced

Farmers can insure themselves against adverse price swings through the __________ market.

Studies shows that income elasticity of demand for food is

Farmers as a group generally prefer bad weather to good weather because bad weather shifts the demand curve for their product rightward and raises the price of their product.

Exhibit 39-4 -Refer to Exhibit 39-4.At a target price of $4 per bushel,how much does the private sector spend on wheat?

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P₁,the per-unit deficiency payment will be:

Increased productivity in the agricultural sector has the output and the prices of agricultural goods.

An agricultural price support

Suppose farmers get together and decide to be less productive.They want to do this so that they can shift the supply curve of farm products leftward and raise the price.They must be assuming that the demand curve between the current price and the higher price is

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

A decrease in the supply of an agricultural product will increase the total revenue of farmers if the demand for the agricultural product is

The combination of income elasticity of demand for food and high agricultural productivity leads to the demand for food increasing and the supply of food increasing even more,which has lead to rising prices of food.

Bad weather is likely to

Stating that income elasticity of demand for potatoes equals 0.15 is equivalent to stating that if income

Exhibit 39-8 -Refer to Exhibit 39-8.Assume that E₁ represents the initial equilibrium in the market for grain X.If all the farmers agree to restrict production and abide by the agreement,

If the demand curve for agricultural products is inelastic and farmers as a group become more productive,then prices of agricultural goods will and total revenue earned by farmers will .

Exhibit 39-4 -Refer to Exhibit 39-4.The price elasticity of demand for wheat between the prices of $3 and $4 is

If a farmer rents the land he works on,then any price support or deficiency payments he receives capitalized into the value of that land,and so his economic profit from farming .

The demand for farm goods is income inelastic if the percentage change in quantity demanded is the percentage change in .

Under the target price program,

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

During the twentieth century,the U.S.farm sector experienced

Farmers can insure themselves against adverse price swings through the __________ market.

Studies shows that income elasticity of demand for food is

Farmers as a group generally prefer bad weather to good weather because bad weather shifts the demand curve for their product rightward and raises the price of their product.

Exhibit 39-4 -Refer to Exhibit 39-4.At a target price of $4 per bushel,how much does the private sector spend on wheat?

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Increased productivity in the agricultural sector has __________ the output and __________ the prices of agricultural goods.

An agricultural price support

Suppose farmers get together and decide to be less productive.They want to do this so that they can shift the supply curve of farm products leftward and raise the price.They must be assuming that the demand curve between the current price and the higher price is

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

A decrease in the supply of an agricultural product will increase the total revenue of farmers if the demand for the agricultural product is

The combination of income elasticity of demand for food and high agricultural productivity leads to the demand for food increasing and the supply of food increasing even more,which has lead to rising prices of food.

Bad weather is likely to

Stating that income elasticity of demand for potatoes equals 0.15 is equivalent to stating that if income

Exhibit 39-8 -Refer to Exhibit 39-8.Assume that E1 represents the initial equilibrium in the market for grain X.If all the farmers agree to restrict production and abide by the agreement,

If the demand curve for agricultural products is inelastic and farmers as a group become more productive,then prices of agricultural goods will __________ and total revenue earned by farmers will __________.

Exhibit 39-4 -Refer to Exhibit 39-4.The price elasticity of demand for wheat between the prices of $3 and $4 is

If a farmer rents the land he works on,then any price support or deficiency payments he receives __________ capitalized into the value of that land,and so his economic profit from farming __________.

The demand for farm goods is income inelastic if the percentage change in quantity demanded is __________ the percentage change in __________.

Under the target price program,

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P₁,the per-unit deficiency payment will be:

Increased productivity in the agricultural sector has the output and the prices of agricultural goods.

Exhibit 39-8 -Refer to Exhibit 39-8.Assume that E₁ represents the initial equilibrium in the market for grain X.If all the farmers agree to restrict production and abide by the agreement,

If the demand curve for agricultural products is inelastic and farmers as a group become more productive,then prices of agricultural goods will and total revenue earned by farmers will .

If a farmer rents the land he works on,then any price support or deficiency payments he receives capitalized into the value of that land,and so his economic profit from farming .

The demand for farm goods is income inelastic if the percentage change in quantity demanded is the percentage change in .