Question 1

Which of the following statements is correct?

Accepted Answer

A)  The price support program hastened the exodus of resources from agriculture.
B)  The main beneficiaries of government price support assistance were the very low income farmers.
C)  If the demand for agricultural products is inelastic, a relatively small decrease in supply will increase gross farm incomes.
D)  There is a misallocation of resources in rural America because of absolute and relative increases in the size of the farm population.E) A) and B)
F) A) and C)

Question 2

Public choice theory would suggest that the lobbying of Congress by farm organizations for legislation that would increase the appropriations from the U.S. government for agricultural programs is an example of

Accepted Answer

A)  revealed preference.
B)  rent-seeking behavior.
C)  the paradox of voting.
D)  the median voter model.E) None of the above
F) All of the above

Question 3

The Food, Conservation, and Energy Act of 2008

Accepted Answer

A)  ended 60 years of U.S. price supports for American grain crops.
B)  restored the U.S. price support system (for currently grown crops) that was ended in the Freedom to Farm Act of 1996.
C)  ended the "freedom to plant" approach of the Freedom to Farm Act of 1996 and restored acreage allotments.
D)  maintained the "freedom to plant" and "direct-payment" features of the Freedom to Farm Act of 1996, and also provided countercyclical payments and marketing loans to assist farmers.E) B) and D)
F) All of the above

Question 4

The price of a certain farm product was $2.00 in the base period when the parity ratio was 100. If the index of prices paid by farmers is now at 130, then the parity price of this farm product today should be

Accepted Answer

A)  1.40.
B)  2.60.
C)  2.30.
D)  1.70.E) B) and D)
F) A) and C)

Question 5

Refer to the diagram. If output changes from a poor crop, Qₚ , to a bumper crop, Qᵦ ,

Accepted Answer

A)  farm incomes will decrease.
B)  farm incomes will increase.
C)  price and quantity will both increase.
D)  farm incomes may either rise or fall.E) All of the above
F) C) and D)

Question 6

The misallocation of resources associated with price supports

Accepted Answer

A)  affects both domestic and foreign economies.
B)  affects only foreign economies.
C)  affects only the domestic economy.
D)  is fully offset by reductions in food prices.E) B) and C)
F) C) and D)

Question 7

Due to high fixed costs relative to variable costs in farming, farm production is quite sensitive to price changes in the short run.

Accepted Answer

A) True 
 B)False

Question 8

A source of demand volatility for agricultural products is

Accepted Answer

A)  the strict application of "100 percent parity" by the Department of Agriculture.
B)  a sharp fluctuation in foreign demand for U.S. farm products.
C)  the large grain harvest which resulted from excellent weather.
D)  the increasing mechanization of farms.E) All of the above
F) A) and B)

Question 9

Ward Planter exclusively grew soybeans from 2011 to 2013 and participated in the marketing loan program of the Food, Conservation, and Energy Act of 2008. If the "crop price" of soybeans at harvest was less than the preharvest "loan price," Planter could

Accepted Answer

A)  sell his crop in the market and receive the difference between the crop price and loan price as a direct payment from the federal government.
B)  take a "crop credit" based on the difference between the crop price and the loan price and use the credit to reduce federal income taxes owed.
C)  receive an "emergency loan" that could be paid back over the following five years.
D)  forfeit the harvest to the lender and be free of the loan, thus receiving a subsidy because the proceeds from the loan exceeded the revenues from the sale of the crop in the market.E) B) and C)
F) A) and D)

Question 10

c to Qₐ B) a decrease in quantity from Qᵦ to Qₐ C) an increase in quantity from Qₐ to Qc D) an increase in quantity from Qₐ to Qᵦ" class="answers-bank-image d-inline" rel="preload" > Refer to the demand graph for a farm product. Which of the following will cause the largest decrease in farmers' incomes?

Accepted Answer

A)  a decrease in quantity from Qc to Qₐ
B)  a decrease in quantity from Qᵦ to Qₐ
C)  an increase in quantity from Qₐ to Qc
D)  an increase in quantity from Qₐ to QᵦE) B) and C)
F) A) and C)

Question 11

Incomes of U.S. farmers are adversely affected by

Accepted Answer

A)  very good harvests on farms abroad.
B)  economic expansion abroad.
C)  less protectionist farm policies abroad.
D)  higher prices of farm products.E) B) and C)
F) A) and D)

Question 12

Refer to the graph of the market for wheat. The government adopts a price support program for wheat and supports the wheat price at P ₂. The area of Q ₁ ABQ ₂ would measure the

Accepted Answer

A)  total amount received by farmers from selling wheat.
B)  total profits of wheat farmers.
C)  amount government will pay to wheat farmers.
D)  amount buyers of wheat will pay to wheat farmers.E) None of the above
F) A) and B)

Question 13

The farm price-support programs hurt consumers of the farm products, and moreover, the burden tends to be disproportionately heavier on the low-income consumers.

Accepted Answer

A) True 
 B)False

Question 14

A declining parity ratio implies that the

Accepted Answer

A)  prices paid by farmers rose faster than the prices that farmers received.
B)  prices received by farmers rose faster than the prices that farmers paid.
C)  productivity of farmers is declining.
D)  prices paid and received by farmers are both falling.E) C) and D)
F) B) and D)

Question 15

What is the Conservation Reserve Program? Comment on the program's effectiveness.

Accepted Answer

The aim of the program was to reduce the...

Question 16

Refer to the graph of the supply and demand for agricultural products. Which of the following best describes the long-run decline of the U.S. agricultural industry?

Accepted Answer

A)  a shift in supply from S₁ to S₂ and a shift in demand from D₂ to D₁
B)  a shift in supply from S₁ to S₃ and a shift in demand from D₁ to D₂
C)  a shift in supply from S₃ to S₁ and a shift in demand from D₁ to D₃
D)  a shift in supply from S₁ to S₂ and a shift in demand from D₃ to D₁E) All of the above
F) C) and D)

Question 17

Which of the following statements about U.S. farm exports as a percentage of farm output is false?

Accepted Answer

A)  It has been on an upward general trend since 1950.
B)  It has been fluctuating, contributing to the instability of the demand for U.S. farm output.
C)  It has been declining since 1950.
D)  It has been hovering around 33 percent in recent years (the period 2008-2018) .E) A) and C)
F) A) and B)

Question 18

If the parity ratio goes from 1 to 0.8, it means that the prices received by farmers had

Accepted Answer

A)  fallen by 20 percent relative to the prices they paid.
B)  fallen by 25 percent relative to the prices they paid.
C)  risen by 20 percent relative to the prices they paid.
D)  risen by 25 percent relative to the prices they paid.E) A) and C)
F) B) and D)

Question 19

Refer to the graph of the supply and demand for agricultural products. If point 1 reflects the supply and demand for agricultural products in the U.S. in the 1950s, then which point would best characterize long-run change in the equilibrium for agricultural products since that time?

Accepted Answer

A)  2
B)  4
C)  7
D)  8E) None of the above
F) C) and D)

Question 20

Which of the following statements describes how a price-change in a purely competitive market would eliminate the surplus of an agricultural commodity?

Accepted Answer

A)  As the price increases, the quantity demanded increases while the quantity supplied decreases.
B)  As the price increases, the quantity demanded decreases while the quantity supplied increases.
C)  As the price decreases, the quantity demanded increases while the quantity supplied decreases.
D)  As the price decreases, the quantity demanded decreases while the quantity supplied increases.E) A) and B)
F) None of the above

Exam 22: Agriculture: Economics and Policy

Refer to the graph of the market for wheat. The government adopts a price support program for wheat and supports the wheat price at P ₂. The area of Q ₁ ABQ ₂ would measure the

Correct AnswerverifiedShow Answer

Refer to the demand graph for a farm product. Which of the following will cause the largest decrease in farmers' incomes?

Correct AnswerverifiedShow Answer

Refer to the diagram. If output changes from a poor crop, Qₚ , to a bumper crop, Qᵦ ,

Correct AnswerverifiedShow Answer

The farm price-support programs hurt consumers of the farm products, and moreover, the burden tends to be disproportionately heavier on the low-income consumers.

Correct AnswerverifiedShow Answer

Incomes of U.S. farmers are adversely affected by

Correct AnswerverifiedShow Answer

What is the Conservation Reserve Program? Comment on the program's effectiveness.

Correct AnswerverifiedThe aim of the program was to reduce the...View AnswerShow Answer

Ward Planter exclusively grew soybeans from 2011 to 2013 and participated in the marketing loan program of the Food, Conservation, and Energy Act of 2008. If the "crop price" of soybeans at harvest was less than the preharvest "loan price," Planter could

Correct AnswerverifiedShow Answer

Refer to the graph of the supply and demand for agricultural products. Which of the following best describes the long-run decline of the U.S. agricultural industry?

Correct AnswerverifiedShow Answer

A declining parity ratio implies that the

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Due to high fixed costs relative to variable costs in farming, farm production is quite sensitive to price changes in the short run.

Correct AnswerverifiedShow Answer

A source of demand volatility for agricultural products is

Correct AnswerverifiedShow Answer

The Food, Conservation, and Energy Act of 2008

Correct AnswerverifiedShow Answer

If the parity ratio goes from 1 to 0.8, it means that the prices received by farmers had

Correct AnswerverifiedShow Answer

Which of the following statements describes how a price-change in a purely competitive market would eliminate the surplus of an agricultural commodity?

Correct AnswerverifiedShow Answer

Public choice theory would suggest that the lobbying of Congress by farm organizations for legislation that would increase the appropriations from the U.S. government for agricultural programs is an example of

Correct AnswerverifiedShow Answer

The misallocation of resources associated with price supports

Correct AnswerverifiedShow Answer

The price of a certain farm product was $2.00 in the base period when the parity ratio was 100. If the index of prices paid by farmers is now at 130, then the parity price of this farm product today should be

Correct AnswerverifiedShow Answer

Refer to the graph of the supply and demand for agricultural products. If point 1 reflects the supply and demand for agricultural products in the U.S. in the 1950s, then which point would best characterize long-run change in the equilibrium for agricultural products since that time?

Correct AnswerverifiedShow Answer

Which of the following statements about U.S. farm exports as a percentage of farm output is false?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The aim of the program was to reduce the...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified