Question 1

Studies show that as real income has been rising in the United States,the per-capita demand for food has been increasing by

Accepted Answer

A)  much less, which means the demand for food is income inelastic. 
B)  much more, which means the demand for food is income elastic. 
C)  much more, which means the demand for food is income inelastic. 
D)  as much, which means the demand for food is unit elastic. 
E)  none of the above 
A)  much less, which means the demand for food is income inelastic. 
B)  much more, which means the demand for food is income elastic. 
C)  much more, which means the demand for food is income inelastic. 
D)  as much, which means the demand for food is unit elastic. 
E)  none of the above

Question 2

Exhibit 39-7
  
-Refer to Exhibit 39-7.Let E1 represent the initial equilibrium in the market for X.A combination of population growth and an increase in agricultural productivity will likely result in a new equilibrium at

Accepted Answer

A)  E2. 
B)  E3. 
C)  E4. 
D)  E5. 
E)  E4 or E5, depending on the extent of income elasticity of demand. 
A)  E2. 
B)  E3. 
C)  E4. 
D)  E5. 
E)  E4 or E5, depending on the extent of income elasticity of demand.

Question 3

Exhibit 39-2
  
-Refer to Exhibit 39-2.If P1 is a price support,the quantity of wheat purchased by the government would be equal to

Accepted Answer

A)  Q0 - Q1. 
B)  Q2 - Q1. 
C)  Q2 - Q0. 
D)  Q2. 
E)  Q1. 
A)  Q0 - Q1. 
B)  Q2 - Q1. 
C)  Q2 - Q0. 
D)  Q2. 
E)  Q1.

Question 4

Here are four positions that Farmer Gomez can be in: (1)bad weather for Gomez and good weather for all other farmers; (2)bad weather for all farmers except Gomez (who witnesses good weather); (3)bad weather for all farmers; (4)good weather for all farmers.Assuming the demand for foodstuffs is inelastic,Farmer Gomez would probably rank these four positions,from best for him to worst for him,the following way:

Accepted Answer

A)  1,2,3,4 
B)  2,1,3,4 
C)  2,3,4,1 
D)  4,3,2,1 
E)  3,4,1,2 
A)  1,2,3,4 
B)  2,1,3,4 
C)  2,3,4,1 
D)  4,3,2,1 
E)  3,4,1,2

Question 5

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 6

Exhibit 39-1
  
-Refer to Exhibit 39-1.Given the target price of PT,farmers will receive a total income equal to

Accepted Answer

A)  0PTBQ2. 
B)  0P1CQ2. 
C)  0PTAQ3. 
D)  0P2EQ1. 
A)  0PTBQ2. 
B)  0P1CQ2. 
C)  0PTAQ3. 
D)  0P2EQ1.

Question 7

Exhibit 39-4
  
-Refer to Exhibit 39-4.If the government sets a target price at $5 per bushel,the quantity of wheat produced will be

Accepted Answer

A)  600 bushels. 
B)  700 bushels. 
C)  800 bushels. 
D)  900 bushels. 
E)  1,000 bushels. 
A)  600 bushels. 
B)  700 bushels. 
C)  800 bushels. 
D)  900 bushels. 
E)  1,000 bushels.

Question 8

Exhibit 39-1
  
-Refer to Exhibit 39-1.Given the target price of PT,the deficiency payment per unit is
A) PT - P2.
B) PT + P1.
C) PT - P2.
D) PT - P1.

Accepted Answer

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.What are the thoughts of a profit-maximizing farmer most likely to be once this agreement has been made?

Accepted Answer

A)  If I break the agreement while everyone else holds to it, I can make myself better off. 
B)  I am happy that we decided to be unproductive; I can't be unproductive by myself. 
C)  I will definitely hold to the agreement. 
D)  Everyone will break the agreement but me. 
A)  If I break the agreement while everyone else holds to it, I can make myself better off. 
B)  I am happy that we decided to be unproductive; I can't be unproductive by myself. 
C)  I will definitely hold to the agreement. 
D)  Everyone will break the agreement but me.

Question 10

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

Accepted Answer

A)  marketing quota system. 
B)  acreage allotment program. 
C)  price support program. 
D)  target price system. 
A)  marketing quota system. 
B)  acreage allotment program. 
C)  price support program. 
D)  target price system.

Question 11

If the demand for a particular agricultural product is highly elastic and bad weather causes the supply to decrease,then we would expect the price of agricultural products to

Accepted Answer

A)  decrease and farmers' revenues to decrease. 
B)  increase and the demand to decrease. 
C)  increase while farmers' revenues decrease significantly. 
D)  increase by a large percentage while farmers' revenues decrease only slightly. 
A)  decrease and farmers' revenues to decrease. 
B)  increase and the demand to decrease. 
C)  increase while farmers' revenues decrease significantly. 
D)  increase by a large percentage while farmers' revenues decrease only slightly.

Question 12

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 13

Unlike in the 1930's,farmers today can insure themselves against price swings that would impact them adversely through the futures market.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 39-4
  
-Refer to Exhibit 39-4.The price support of $6 per bushel results in private citizens spending __________ on wheat.

Accepted Answer

A)  $600 
B)  $3,000 
C)  $3,600 
D)  $4,800 
E)  $6,600 
A)  $600 
B)  $3,000 
C)  $3,600 
D)  $4,800 
E)  $6,600

Question 15

In the U.S.,studies have shown that as real incomes have risen,per capita demand for food has been increasing by much less.

Accepted Answer

A) True 
 B)False

Question 16

The price elasticity of demand for many agricultural products is (absolute value)less than 1,meaning that these products are inelastic in demand.

Accepted Answer

A) True 
 B)False

Question 17

Which combination of factors would lead to large price and total revenue changes?

Accepted Answer

A)  inelastic demand for a product and large swings in supply 
B)  elastic demand for a product and small swings in supply 
C)  inelastic demand for a product and constant supply 
D)  a and c 
E)  none of the above 
A)  inelastic demand for a product and large swings in supply 
B)  elastic demand for a product and small swings in supply 
C)  inelastic demand for a product and constant supply 
D)  a and c 
E)  none of the above

Question 18

During much of the 20th century,agricultural product prices

Accepted Answer

A)  rose relative to other prices. 
B)  fell relative to other prices. 
C)  neither rose nor fell relative to other prices. 
D)  rose as agricultural productivity increased. 
A)  rose relative to other prices. 
B)  fell relative to other prices. 
C)  neither rose nor fell relative to other prices. 
D)  rose as agricultural productivity increased.

Question 19

Which of the following is true?

Accepted Answer

A)  In a price support program, consumers end up paying the price support. 
B)  In a target price system, consumers end up paying the target price. 
C)  In a target price system, the per-unit deficiency payment is equal to the difference between the quantity demanded at the market price and the quantity supplied at the market price. 
D)  Acreage allotment programs directly (as opposed to indirectly) raise agricultural product prices. 
E)  b and d 
A)  In a price support program, consumers end up paying the price support. 
B)  In a target price system, consumers end up paying the target price. 
C)  In a target price system, the per-unit deficiency payment is equal to the difference between the quantity demanded at the market price and the quantity supplied at the market price. 
D)  Acreage allotment programs directly (as opposed to indirectly) raise agricultural product prices. 
E)  b and d

Question 20

Agriculture productivity has increased more rapidly in the U.S.than has nonagriculture productivity.

Accepted Answer

A) True 
 B)False

Exam 39: Agriculture: Problems, Policies, and Unintended Effects

Studies show that as real income has been rising in the United States,the per-capita demand for food has been increasing by

Exhibit 39-7 -Refer to Exhibit 39-7.Let E1 represent the initial equilibrium in the market for X.A combination of population growth and an increase in agricultural productivity will likely result in a new equilibrium at

Exhibit 39-2 -Refer to Exhibit 39-2.If P1 is a price support,the quantity of wheat purchased by the government would be equal to

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.

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price of PT,farmers will receive a total income equal to

Exhibit 39-4 -Refer to Exhibit 39-4.If the government sets a target price at $5 per bushel,the quantity of wheat produced will be

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price of PT,the deficiency payment per unit is A) PT - P2. B) PT + P1. C) PT - P2. D) PT - P1.

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.What are the thoughts of a profit-maximizing farmer most likely to be once this agreement has been made?

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

If the demand for a particular agricultural product is highly elastic and bad weather causes the supply to decrease,then we would expect the price of agricultural products to

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.

Unlike in the 1930's,farmers today can insure themselves against price swings that would impact them adversely through the futures market.

Exhibit 39-4 -Refer to Exhibit 39-4.The price support of $6 per bushel results in private citizens spending __________ on wheat.

In the U.S.,studies have shown that as real incomes have risen,per capita demand for food has been increasing by much less.

The price elasticity of demand for many agricultural products is (absolute value)less than 1,meaning that these products are inelastic in demand.

Which combination of factors would lead to large price and total revenue changes?

During much of the 20th century,agricultural product prices

Which of the following is true?

Agriculture productivity has increased more rapidly in the U.S.than has nonagriculture productivity.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Filters

Exhibit 39-7 -Refer to Exhibit 39-7.Let E₁ represent the initial equilibrium in the market for X.A combination of population growth and an increase in agricultural productivity will likely result in a new equilibrium at

Exhibit 39-2 -Refer to Exhibit 39-2.If P₁ is a price support,the quantity of wheat purchased by the government would be equal to

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price of P_T,farmers will receive a total income equal to

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price of P_T,the deficiency payment per unit is A) P_T - P₂. B) P_T + P₁. C) P_T - P₂. D) P_T - P₁.