Question 1

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. 
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.

Question 2

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. 
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.

Question 3

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

Question 4

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. 
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.

Question 5

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. 
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.

Question 6

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. 
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.

Question 7

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. 
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.

Question 8

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

Question 9

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. 
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.

Question 10

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 11

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. 
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.

Question 12

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. 
A) $6 and 180 bushels. 
B) $7 and 220 bushels. 
C) $8 and 260 bushels. 
D) $8 and 160 bushels.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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. 
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.

Question 15

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

Question 16

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. 
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.

Question 17

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

Question 18

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. 
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.

Question 19

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

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 20

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

Accepted Answer

In industrially advanced economies, the

Exam 22: Agriculture: Economics and Policy

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

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

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

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

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

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

Which of the following is not a goal of the "parity concept" in U.S. agriculture 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 Q ₁ ABQ ₂ represents the

The Food for Peace program is designed to

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

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

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

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

The Agricultural Act of 2014

The price elasticity of demand for food tends to be

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

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

The Conservation Reserve Program

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

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

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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