Question 1

Farm programs such as those maintained by the European Union (EU) and the United States

Accepted Answer

A)  aid developing nations by creating a large market for agriculture.
B)  decrease the incomes of farmers in EU nations and in the United States.
C)  improve efficiency in the allocation of agricultural resources.
D)  distort world trade in agricultural products.E) A) and B)
F) A) and C)

Question 2

The Conservation Reserve Program

Accepted Answer

A)  bought up farmland to set aside for wetlands and wildlife reserves.
B)  paid farmers to convert farmland to forests.
C)  encouraged greater farm production to export to countries setting aside land for wildlife conservation.
D)  has driven many farmers into industrial occupations.E) B) and D)
F) None of the above

Question 3

If the parity ratio goes from 0.8 to 0.7, it means that the prices received by farmers had

Accepted Answer

A)  fallen by 12.5 percent relative to the prices they paid.
B)  fallen by 10 percent relative to the prices they paid.
C)  risen by 12.5 percent relative to the prices they paid.
D)  risen by 10 percent relative to the prices they paid.E) B) and D)
F) A) and B)

Question 4

Government and private efforts to promote the production of "gasohol" using corn-based ethanol are an attempt to

Accepted Answer

A)  increase the supply of certain farm products.
B)  increase the demand for certain farm products.
C)  decrease the demand for certain farm products.
D)  decrease the supply of certain farm products.E) B) and C)
F) A) and D)

Question 5

Refer to the table. In a competitive market for this agricultural product, the equilibrium price and output level will be

Accepted Answer

A)  $6 and 180 bushels.
B)  $7 and 220 bushels.
C)  $8 and 260 bushels.
D)  $8 and 160 bushels.E) B) and C)
F) All of the above

Question 6

The price and income support programs for agriculture have given the most benefit to those farmers with the most need for the government assistance.

Accepted Answer

A) True 
 B)False

Question 7

The Freedom to Farm Act of 1996 was designed to encourage farmers to

Accepted Answer

A)  seek more subsidies from government.
B)  plant more corn and less soybeans.
C)  plant more wheat and less corn.
D)  respond to market prices.E) C) and D)
F) B) and D)

Question 8

Farm outputs' share of U.S. GDP from 1950 to the present has

Accepted Answer

A)  stayed roughly constant at about 10 percent.
B)  dropped from about 30 percent to 10 percent.
C)  stayed roughly constant at about 30 percent.
D)  dropped from about 7 percent to 1 percent.E) None of the above
F) All of the above

Question 9

The Agricultural Act of 2014

Accepted Answer

A)  ended 60 years of U.S. price supports for American grain crops.
B)  eliminated the marketing loan program that was established by the Food, Conservation, and Energy Act of 2008.
C)  ended the "freedom to plant" approach of the Freedom to Farm Act of 1996 and restored acreage allotments.
D)  added two new crop insurance programs, agricultural risk coverage and price loss coverage.E) A) and C)
F) A) and D)

Question 10

Refer to the table. In a competitive market for this agricultural product, the equilibrium price and output level will be

Accepted Answer

A)  $5 and 140 bushels.
B)  $6 and 180 bushels.
C)  $6 and 140 bushels.
D)  $7 and 220 bushels.E) B) and C)
F) A) and B)

Question 11

Because the demand for agricultural products is highly price inelastic, a modest increase in supply will cause

Accepted Answer

A)  relatively large declines in farm prices and incomes.
B)  relatively large increases in farm prices and incomes.
C)  a small decline in farm prices, but an increase in farm incomes.
D)  a large decline in farm prices, but an increase in farm incomes.E) A) and D)
F) B) and C)

Question 12

If the prices paid by farmers increase and the prices received by farmers decrease, then the parity ratio

Accepted Answer

A)  will necessarily decrease.
B)  will necessarily increase.
C)  may either increase or decrease.
D)  will be unaffected.E) B) and D)
F) B) and C)

Question 13

Agricultural price-support programs result in consumers paying lower prices for the product.

Accepted Answer

A) True 
 B)False

Question 14

The price elasticity of demand for food tends to be

Accepted Answer

A)  higher in richer nations.
B)  lower in richer nations.
C)  the same in rich and poor nations.
D)  unrelated to per capita wealth.E) B) and D)
F) A) and D)

Question 15

Refer to the diagram for the corn market. As the result of a supported corn price of B,

Accepted Answer

A)  a surplus of LG will result.
B)  a surplus of LH will result.
C)  a surplus of HG will result.
D)  a shortage of LG will result.E) All of the above
F) B) and C)

Question 16

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 Q ₁ ABQ ₂ represents the

Accepted Answer

A)  parity ratio.
B)  taxpayers' burden.
C)  efficiency gain.
D)  efficiency loss.E) A) and C)
F) B) and C)

Question 17

The Food for Peace program is designed to

Accepted Answer

A)  achieve 100 percent price parity for all farm products.
B)  discover new uses for farm products through research and development.
C)  take agricultural land out of the production of feed grains.
D)  facilitate the distribution of surplus U.S. farm products in the developing countries.E) C) and D)
F) B) and C)

Question 18

Explain why the demand for food is inelastic in terms of the substitution effect and diminishing returns.

Accepted Answer

In industrially advanced economies, the ...

Question 19

Which diagram best represents the problem faced by farms in the short run?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and D)
F) C) and D)

Question 20

Which of the following is not a goal of the "parity concept" in U.S. agriculture policy?

Accepted Answer

A)  Farm households' real income from a given amount of real output should stay the same from year to year.
B)  The ratio of prices paid by farm households to prices received by farm households should remain about the same from year to year.
C)  The average farm households' income should remain at par or equal to the average income of all households.
D)  Changes in the prices paid by farm households should be matched by a proportionate increase in the prices received by farmers.E) A) and B)
F) None of the above

Exam 22: Agriculture: Economics and Policy

Refer to the table. In a competitive market for this agricultural product, the equilibrium price and output level will be

Correct AnswerverifiedShow Answer

The price elasticity of demand for food tends to be

Correct AnswerverifiedShow Answer

Refer to the table. In a competitive market for this agricultural product, the equilibrium price and output level will be

Correct AnswerverifiedShow Answer

Which diagram best represents the problem faced by farms in the short run?

Correct AnswerverifiedShow Answer

The Freedom to Farm Act of 1996 was designed to encourage farmers to

Correct AnswerverifiedShow Answer

Refer to the diagram for the corn market. As the result of a supported corn price of B,

Correct AnswerverifiedShow Answer

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 Q ₁ ABQ ₂ represents the

Correct AnswerverifiedShow Answer

The Food for Peace program is designed to

Correct AnswerverifiedShow Answer

Which of the following is not a goal of the "parity concept" in U.S. agriculture policy?

Correct AnswerverifiedShow Answer

Agricultural price-support programs result in consumers paying lower prices for the product.

Correct AnswerverifiedShow Answer

If the prices paid by farmers increase and the prices received by farmers decrease, then the parity ratio

Correct AnswerverifiedShow Answer

The price and income support programs for agriculture have given the most benefit to those farmers with the most need for the government assistance.

Correct AnswerverifiedShow Answer

If the parity ratio goes from 0.8 to 0.7, it means that the prices received by farmers had

Correct AnswerverifiedShow Answer

The Agricultural Act of 2014

Correct AnswerverifiedShow Answer

Because the demand for agricultural products is highly price inelastic, a modest increase in supply will cause

Correct AnswerverifiedShow Answer

Government and private efforts to promote the production of "gasohol" using corn-based ethanol are an attempt to

Correct AnswerverifiedShow Answer

Farm outputs' share of U.S. GDP from 1950 to the present has

Correct AnswerverifiedShow Answer

The Conservation Reserve Program

Correct AnswerverifiedShow Answer

Explain why the demand for food is inelastic in terms of the substitution effect and diminishing returns.

Correct AnswerverifiedIn industrially advanced economies, the ...View AnswerShow Answer

Farm programs such as those maintained by the European Union (EU) and the United States

Correct AnswerverifiedShow Answer

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In industrially advanced economies, the ...
View Answer

Correct Answer
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