Question 1

The effect of Commodity Credit Corporation loan programs is to alter the quantity demanded of farm products as well as to increase the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 2

A bumper crop of apples can lead to sharply lower market prices and a decline in earned farm income primarily because

Accepted Answer

A) The demand for apples is price-inelastic. 
B) Foreign exports of apples to the United States should increase. 
C) The income elasticity of demand for apples is negative. 
D) The demand curve faced by individual apple farmers is price-inelastic. 
A) The demand for apples is price-inelastic. 
B) Foreign exports of apples to the United States should increase. 
C) The income elasticity of demand for apples is negative. 
D) The demand curve faced by individual apple farmers is price-inelastic.

Question 3

Agriculture industries are notorious for having barriers to entry.

Accepted Answer

A) True 
 B)False

Question 4

Farm price support programs most often take the form of price

Accepted Answer

A) Ceilings above the equilibrium price. 
B) Floors above the equilibrium price. 
C) Ceilings below the equilibrium price. 
D) Floors below the equilibrium price. 
A) Ceilings above the equilibrium price. 
B) Floors above the equilibrium price. 
C) Ceilings below the equilibrium price. 
D) Floors below the equilibrium price.

Question 5

Describe the two major problems confronting U.S.agriculture.

Accepted Answer

The first problem confronting U.S.agricu

Question 6

Over the past century,there has been little variation in the price of corn from one harvest to the next.

Accepted Answer

A) True 
 B)False

Question 7

If the price elasticity of demand for food is low,an increase in supply due to an improvement in technology will result in a ________ price and ________ in total revenue.

Accepted Answer

A) higher;a decrease 
B) lower;an increase 
C) higher;an increase 
D) lower;a decrease 
A) higher;a decrease 
B) lower;an increase 
C) higher;an increase 
D) lower;a decrease

Question 8

The 1996 Farm Act moved farming closer to the realities of the market system.

Accepted Answer

A) True 
 B)False

Question 9

Supply restrictions in the farming industry occur in the form of

Accepted Answer

A) Import quotas. 
B) Government stockpiles. 
C) Price supports. 
D) Production subsidies. 
A) Import quotas. 
B) Government stockpiles. 
C) Price supports. 
D) Production subsidies.

Question 10

From the early 1900s to 2009,the ratio of farm prices to nonfarm prices

Accepted Answer

A) Decreased 60 percent. 
B) Increased 60 percent. 
C) Decreased 25 percent. 
D) Increased 25 percent. 
A) Decreased 60 percent. 
B) Increased 60 percent. 
C) Decreased 25 percent. 
D) Increased 25 percent.

Question 11

Given the typical price elasticity of demand for food,a poor harvest should,ceteris paribus,lead to

Accepted Answer

A) Lower prices but higher total revenues. 
B) Higher prices but lower total revenues. 
C) Lower prices and lower total revenues. 
D) Higher prices and higher total revenues. 
A) Lower prices but higher total revenues. 
B) Higher prices but lower total revenues. 
C) Lower prices and lower total revenues. 
D) Higher prices and higher total revenues.

Question 12

Suppose European incomes increase annually by 4 percent per year,and as a result,U.S.farm exports to Europe rise by 2 percent annually.The U.S.farm exports are

Accepted Answer

A) Inferior goods. 
B) Normal goods. 
C) Price-elastic. 
D) Substitute goods. 
A) Inferior goods. 
B) Normal goods. 
C) Price-elastic. 
D) Substitute goods.

Question 13

Which of the following is true for a perfectly competitive agricultural market with economic profits?

Accepted Answer

A) Firms will enter and existing firms will increase their production until economic profits are zero. 
B) The profits will last indefinitely since there are barriers to entry. 
C) Firms will exit until normal profits are zero. 
D) No entry or exit will occur based on economic profits. 
A) Firms will enter and existing firms will increase their production until economic profits are zero. 
B) The profits will last indefinitely since there are barriers to entry. 
C) Firms will exit until normal profits are zero. 
D) No entry or exit will occur based on economic profits.

Question 14

Suppose European incomes increase by 4 percent per year,and as a result,U.S.exports of farm goods to Europe rise by less than 4 percent annually.The elasticity that can be computed from this information is the

Accepted Answer

A) Price elasticity of supply. 
B) Cross-price elasticity of demand for income with respect to U.S.farm goods. 
C) Income elasticity of demand for U.S.farm exports. 
D) Price elasticity of demand. 
A) Price elasticity of supply. 
B) Cross-price elasticity of demand for income with respect to U.S.farm goods. 
C) Income elasticity of demand for U.S.farm exports. 
D) Price elasticity of demand.

Question 15

Short-term price swings for farm products are partially the result of

Accepted Answer

A) Producers acting collectively to bid up prices. 
B) The high income elasticity of food demand. 
C) The high price elasticity of food demand. 
D) Time lags between the production decision and the resultant harvest. 
A) Producers acting collectively to bid up prices. 
B) The high income elasticity of food demand. 
C) The high price elasticity of food demand. 
D) Time lags between the production decision and the resultant harvest.

Question 16

The demand for food is price-inelastic.

Accepted Answer

A) True 
 B)False

Question 17

One World View article titled "EU Farm Subsidies" reports about the European Union,"… the subsidy for every cow is greater than the personal income of half the people in the world." Which of the following programs is involved?

Accepted Answer

A) Price supports. 
B) Direct income support. 
C) A reduction of production costs. 
D) Consumer rebates. 
A) Price supports. 
B) Direct income support. 
C) A reduction of production costs. 
D) Consumer rebates.

Question 18

Given the typical income elasticity for food,a 10 percent increase in income will lead to

Accepted Answer

A) An increase in food demand of more than 10 percent. 
B) A decrease in food demand of less than 10 percent. 
C) An increase in food demand of 10 percent. 
D) An increase in food demand of less than 10 percent. 
A) An increase in food demand of more than 10 percent. 
B) A decrease in food demand of less than 10 percent. 
C) An increase in food demand of 10 percent. 
D) An increase in food demand of less than 10 percent.

Question 19

As a last resort the federal government may provide direct income support to farmers.One potential advantage of direct income supports is that they

Accepted Answer

A) Provide income security without distorting market prices and output. 
B) Raise market prices. 
C) Increase market output. 
D) Reduce consumption. 
A) Provide income security without distorting market prices and output. 
B) Raise market prices. 
C) Increase market output. 
D) Reduce consumption.

Question 20

Given a change in food prices,farmers are typically able to respond rapidly with a change in output.

Accepted Answer

A) True 
 B)False

Exam 29: The Farm Problem

The effect of Commodity Credit Corporation loan programs is to alter the quantity demanded of farm products as well as to increase the quantity supplied.

A bumper crop of apples can lead to sharply lower market prices and a decline in earned farm income primarily because

Agriculture industries are notorious for having barriers to entry.

Farm price support programs most often take the form of price

Describe the two major problems confronting U.S.agriculture.

Over the past century,there has been little variation in the price of corn from one harvest to the next.

If the price elasticity of demand for food is low,an increase in supply due to an improvement in technology will result in a ________ price and ________ in total revenue.

The 1996 Farm Act moved farming closer to the realities of the market system.

Supply restrictions in the farming industry occur in the form of

From the early 1900s to 2009,the ratio of farm prices to nonfarm prices

Given the typical price elasticity of demand for food,a poor harvest should,ceteris paribus,lead to

Suppose European incomes increase annually by 4 percent per year,and as a result,U.S.farm exports to Europe rise by 2 percent annually.The U.S.farm exports are

Which of the following is true for a perfectly competitive agricultural market with economic profits?

Suppose European incomes increase by 4 percent per year,and as a result,U.S.exports of farm goods to Europe rise by less than 4 percent annually.The elasticity that can be computed from this information is the

Short-term price swings for farm products are partially the result of

The demand for food is price-inelastic.

One World View article titled "EU Farm Subsidies" reports about the European Union,"… the subsidy for every cow is greater than the personal income of half the people in the world." Which of the following programs is involved?

Given the typical income elasticity for food,a 10 percent increase in income will lead to

As a last resort the federal government may provide direct income support to farmers.One potential advantage of direct income supports is that they

Given a change in food prices,farmers are typically able to respond rapidly with a change in output.

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters

If the price elasticity of demand for food is low,an increase in supply due to an improvement in technology will result in a price and in total revenue.