Question 1

Because farm products have a low elasticity of demand,a small change in output will have

Accepted Answer

A) An indeterminate effect on price. 
B) No effect on price. 
C) A smaller effect on price. 
D) A larger effect on price. 
A) An indeterminate effect on price. 
B) No effect on price. 
C) A smaller effect on price. 
D) A larger effect on price.

Question 2

In the late 1990s,the Asian crisis reduced the demand for U.S.farm products,which weakened farm prices.

Accepted Answer

A) True 
 B)False

Question 3

Farm price support programs most often take the form of price

Accepted Answer

A) Ceilings,which cause shortages. 
B) Floors,which cause shortages. 
C) Ceilings,which cause surpluses. 
D) Floors,which cause surpluses. 
A) Ceilings,which cause shortages. 
B) Floors,which cause shortages. 
C) Ceilings,which cause surpluses. 
D) Floors,which cause surpluses.

Question 4

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market,ceteris paribus: The federal government restricts the amount of agricultural products that can be imported.(See Figure 29.4. )

Accepted Answer

A) a. 
B) b. 
C) c. 
D) d. 
A) a. 
B) b. 
C) c. 
D) d.

Question 5

Farmers cannot individually affect market price because

Accepted Answer

A) There is an infinite demand for their goods. 
B) Demand is perfectly inelastic for the farmer's produce. 
C) Their individual production is insignificant relative to the production of the market. 
D) The government exercises control over the market power of competitive firms. 
A) There is an infinite demand for their goods. 
B) Demand is perfectly inelastic for the farmer's produce. 
C) Their individual production is insignificant relative to the production of the market. 
D) The government exercises control over the market power of competitive firms.

Question 6

Which program forces farmers to destroy millions of dollars' worth of crops each year?

Accepted Answer

A) Marketing orders. 
B) Set-asides. 
C) The dairy termination program. 
D) Countercyclical payments. 
A) Marketing orders. 
B) Set-asides. 
C) The dairy termination program. 
D) Countercyclical payments.

Question 7

Which of the following could be used to eliminate potential agricultural shortages?

Accepted Answer

A) Selling the surplus in government stockpiles. 
B) Stimulating export sales. 
C) Acreage set-asides. 
D) Imposing price ceilings. 
A) Selling the surplus in government stockpiles. 
B) Stimulating export sales. 
C) Acreage set-asides. 
D) Imposing price ceilings.

Question 8

If the price elasticity of demand for farm products is low,abrupt changes in farm output will have a limited effect on prices.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following items have been subsidized by the U.S.federal government for farmers?

Accepted Answer

A) Insurance but not drainage. 
B) Fertilizer but not insurance. 
C) Water but not fertilizer. 
D) Insurance,water,drainage,and fertilizer. 
A) Insurance but not drainage. 
B) Fertilizer but not insurance. 
C) Water but not fertilizer. 
D) Insurance,water,drainage,and fertilizer.

Question 10

If parity prices are "fair" they will not cause a market surplus.

Accepted Answer

A) True 
 B)False

Question 11

In a perfectly competitive farm market with economic losses,farmers will

Accepted Answer

A) Buy more farmland and expand until profits are normal. 
B) Exit until accounting profits are zero. 
C) Exit until profits are normal. 
D) Not enter or exit based on economic profits. 
A) Buy more farmland and expand until profits are normal. 
B) Exit until accounting profits are zero. 
C) Exit until profits are normal. 
D) Not enter or exit based on economic profits.

Question 12

Refer to Figure 29.2 for Farmer Sanchez with a price floor set above the market price.Assume the price support is located at the minimum point on the farmer's ATC curve.If this support is eliminated,Farmer Sanchez may do all of the following except

Accepted Answer

A) Leave the market. 
B) Reduce costs by investing in new technology. 
C) Shut down in the short run if price is below the minimum AVC. 
D) Increase production. 
A) Leave the market. 
B) Reduce costs by investing in new technology. 
C) Shut down in the short run if price is below the minimum AVC. 
D) Increase production.

Question 13

An effective price floor

Accepted Answer

A) Results in a surplus. 
B) Results in a shortage. 
C) Occurs when market prices are below equilibrium prices. 
D) Can occur due to collusion. 
A) Results in a surplus. 
B) Results in a shortage. 
C) Occurs when market prices are below equilibrium prices. 
D) Can occur due to collusion.

Question 14

Prices of farm products are

Accepted Answer

A) Very stable in the short run. 
B) Subject to short-term swings. 
C) Below the market equilibrium price because of price support programs. 
D) The result of government-enforced price ceilings in the farming industry. 
A) Very stable in the short run. 
B) Subject to short-term swings. 
C) Below the market equilibrium price because of price support programs. 
D) The result of government-enforced price ceilings in the farming industry.

Question 15

Which of the following government actions will decrease surplus food supplies?

Accepted Answer

A) An increase in the loan rate. 
B) A decrease in acreage set-asides. 
C) Subsidized advertising of U.S.farm products in foreign markets. 
D) A decrease in import restrictions. 
A) An increase in the loan rate. 
B) A decrease in acreage set-asides. 
C) Subsidized advertising of U.S.farm products in foreign markets. 
D) A decrease in import restrictions.

Question 16

The price elasticity of demand for food is

Accepted Answer

A) Perfectly inelastic. 
B) Relatively inelastic. 
C) Relatively elastic. 
D) Perfectly elastic. 
A) Perfectly inelastic. 
B) Relatively inelastic. 
C) Relatively elastic. 
D) Perfectly elastic.

Question 17

Since 1929,there have been very few advances in farming technology.

Accepted Answer

A) True 
 B)False

Question 18

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market,ceteris paribus: Relaxed immigration laws lead to lower labor costs.(See Figure 29.4. )

Accepted Answer

A) a. 
B) b. 
C) c. 
D) d. 
A) a. 
B) b. 
C) c. 
D) d.

Question 19

In 2017 how much could a wheat farmer borrow for every bushel of wheat relinquished to the Commodity Credit Corporation (CCC)?

Accepted Answer

A) $1.95. 
B) $2.94. 
C) $3.00. 
D) $5.00. 
A) $1.95. 
B) $2.94. 
C) $3.00. 
D) $5.00.

Question 20

If an agricultural market is perfectly competitive,which of the following types of behavior might be expected?

Accepted Answer

A) Price wars. 
B) Economic profits encourage entry. 
C) Advertising. 
D) Collusion in restraint of trade. 
A) Price wars. 
B) Economic profits encourage entry. 
C) Advertising. 
D) Collusion in restraint of trade.

Exam 29: The Farm Problem

Because farm products have a low elasticity of demand,a small change in output will have

In the late 1990s,the Asian crisis reduced the demand for U.S.farm products,which weakened farm prices.

Farm price support programs most often take the form of price

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market,ceteris paribus: The federal government restricts the amount of agricultural products that can be imported.(See Figure 29.4. )

Farmers cannot individually affect market price because

Which program forces farmers to destroy millions of dollars' worth of crops each year?

Which of the following could be used to eliminate potential agricultural shortages?

If the price elasticity of demand for farm products is low,abrupt changes in farm output will have a limited effect on prices.

Which of the following items have been subsidized by the U.S.federal government for farmers?

If parity prices are "fair" they will not cause a market surplus.

In a perfectly competitive farm market with economic losses,farmers will

Refer to Figure 29.2 for Farmer Sanchez with a price floor set above the market price.Assume the price support is located at the minimum point on the farmer's ATC curve.If this support is eliminated,Farmer Sanchez may do all of the following except

An effective price floor

Prices of farm products are

Which of the following government actions will decrease surplus food supplies?

The price elasticity of demand for food is

Since 1929,there have been very few advances in farming technology.

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market,ceteris paribus: Relaxed immigration laws lead to lower labor costs.(See Figure 29.4. )

In 2017 how much could a wheat farmer borrow for every bushel of wheat relinquished to the Commodity Credit Corporation (CCC)?

If an agricultural market is perfectly competitive,which of the following types of behavior might be expected?

Economics: the Core Issues

The Useconomy: a Global View

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The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

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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

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Transfer Payments: Welfare and Social Security

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