Question 1

(Consider This) Which of the following methods is used by farmers to "hedge" against short-run price and output fluctuations?

Accepted Answer

A)  securing prices for their output in the futures market 
B)  purchasing crop revenue insurance to insure against natural disasters 
C)  leasing land to other farmers in return for stable rent payments 
D)  All of these risk-management techniques are used. 
A)  securing prices for their output in the futures market 
B)  purchasing crop revenue insurance to insure against natural disasters 
C)  leasing land to other farmers in return for stable rent payments 
D)  All of these risk-management techniques are used.

Question 2

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because

Accepted Answer

A)  they distort domestic and world agricultural prices. 
B)  they inhibit technological progress in agriculture. 
C)  production and trade occur on the basis of comparative advantage. 
D)  price supports are set below market-clearing levels. 
A)  they distort domestic and world agricultural prices. 
B)  they inhibit technological progress in agriculture. 
C)  production and trade occur on the basis of comparative advantage. 
D)  price supports are set below market-clearing levels.

Question 3

The inelastic demand for agricultural products means that a(n)

Accepted Answer

A)  decrease in price will increase farm incomes. 
B)  increase in price will decrease farm incomes. 
C)  decrease in price will decrease farm incomes. 
D)  increase in price will not change farm incomes. 
A)  decrease in price will increase farm incomes. 
B)  increase in price will decrease farm incomes. 
C)  decrease in price will decrease farm incomes. 
D)  increase in price will not change farm incomes.

Question 4

From 2010 to 2012, Johnny Deer exclusively grew corn. Under the Food, Conservation, and Energy Act of 2008, Deer

Accepted Answer

A)  was required to grow corn in the next year in order to receive direct payments from the federal government. 
B)  was allowed to grow whatever crop he wanted in the next year, but would only receive direct payments from the federal government if the price of corn fell below a targeted price. 
C)  was eligible to receive countercyclical payments if the price of corn fell below a targeted price, even though he did not grow corn in the next year. 
D)  had to grow something other than corn the next year to qualify for direct payments from the federal government. 
A)  was required to grow corn in the next year in order to receive direct payments from the federal government. 
B)  was allowed to grow whatever crop he wanted in the next year, but would only receive direct payments from the federal government if the price of corn fell below a targeted price. 
C)  was eligible to receive countercyclical payments if the price of corn fell below a targeted price, even though he did not grow corn in the next year. 
D)  had to grow something other than corn the next year to qualify for direct payments from the federal government.

Question 5

The price elasticity of demand for most agricultural products is relatively low.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is correct?

Accepted Answer

A)  The parity ratio has not exceeded 100 in the 20th or 21st century. 
B)  An increase in prices paid by farmers relative to prices received by farmers will increase the parity ratio. 
C)  The parity ratio has generally been greater than 100 in the past four decades. 
D)  The parity ratio has generally declined over the past five decades. 
A)  The parity ratio has not exceeded 100 in the 20th or 21st century. 
B)  An increase in prices paid by farmers relative to prices received by farmers will increase the parity ratio. 
C)  The parity ratio has generally been greater than 100 in the past four decades. 
D)  The parity ratio has generally declined over the past five decades.

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

The Agricultural Act of 2014 expanded the direct payments, countercyclical payments, and marketing loans provided by the Food, Conservation, and Energy Act of 2008.

Accepted Answer

A) True 
 B)False

Question 9

If government establishes a system of price supports, it is in effect setting a

Accepted Answer

A)  price ceiling. 
B)  price floor. 
C)  maximum level of output. 
D)  minimum level of output. 
A)  price ceiling. 
B)  price floor. 
C)  maximum level of output. 
D)  minimum level of output.

Question 10

Farm programs such as those of the United States and the European Union

Accepted Answer

A)  are consistent with free world trade in agricultural products. 
B)  cause a misallocation of agricultural resources internationally. 
C)  cause the United States and the European Union to underproduce, while other nations overproduce, farm products. 
D)  raise productivity in developing nations. 
A)  are consistent with free world trade in agricultural products. 
B)  cause a misallocation of agricultural resources internationally. 
C)  cause the United States and the European Union to underproduce, while other nations overproduce, farm products. 
D)  raise productivity in developing nations.

Question 11

Which of the following best describes the short-run problem faced by farms?

Accepted Answer

A)  New technology has increased the productivity of farmers and therefore resulted in declining farm prices and low farm incomes. 
B)  The highly inelastic nature of agricultural demand, together with fluctuations in exports of farm goods, has caused small year-to-year fluctuations in farm output to result in highly unstable farm incomes. 
C)  The supply of farm products has increased relative to the demand for them, and because demand is inelastic, prices of farm output and farm income have therefore declined. 
D)  The demand for farm products has increased relative to their supply, but the elastic nature of agricultural demand has caused these shifts to result in declining farm incomes. 
A)  New technology has increased the productivity of farmers and therefore resulted in declining farm prices and low farm incomes. 
B)  The highly inelastic nature of agricultural demand, together with fluctuations in exports of farm goods, has caused small year-to-year fluctuations in farm output to result in highly unstable farm incomes. 
C)  The supply of farm products has increased relative to the demand for them, and because demand is inelastic, prices of farm output and farm income have therefore declined. 
D)  The demand for farm products has increased relative to their supply, but the elastic nature of agricultural demand has caused these shifts to result in declining farm incomes.

Question 12

An extraordinarily small crop of farm products due to drought causes

Accepted Answer

A)  a large increase in the price of farm products because the demand for farm products is price inelastic. 
B)  only a slight increase in the price of farm products because the demand for farm products is income elastic. 
C)  only a slight increase in the price of farm products because the demand for farm products is income inelastic. 
D)  a large increase in the price of farm products because the demand for farm products is price elastic. 
A)  a large increase in the price of farm products because the demand for farm products is price inelastic. 
B)  only a slight increase in the price of farm products because the demand for farm products is income elastic. 
C)  only a slight increase in the price of farm products because the demand for farm products is income inelastic. 
D)  a large increase in the price of farm products because the demand for farm products is price elastic.

Question 13

The following factors have boosted farm income per farm household in the U.S., except

Accepted Answer

A)  consolidation of farms. 
B)  outmigration from farming. 
C)  stronger, or appreciating, dollar. 
D)  significant government subsidies. 
A)  consolidation of farms. 
B)  outmigration from farming. 
C)  stronger, or appreciating, dollar. 
D)  significant government subsidies.

Question 14

The 2014 Agriculture Act in the U.S. eliminated farm subsidies so as to encourage farmers to move their resources to nonfarming production activities.

Accepted Answer

A) True 
 B)False

Question 15

The demand for agricultural products rises less rapidly than income. This means that the demand for agricultural products is

Accepted Answer

A)  income inelastic. 
B)  income elastic. 
C)  price inelastic. 
D)  price elastic. 
A)  income inelastic. 
B)  income elastic. 
C)  price inelastic. 
D)  price elastic.

Question 16

The federal government has tried to eliminate agricultural surpluses by

Accepted Answer

A)  decreasing supply and demand. 
B)  increasing supply and demand. 
C)  decreasing supply and increasing demand. 
D)  increasing supply and decreasing demand. 
A)  decreasing supply and demand. 
B)  increasing supply and demand. 
C)  decreasing supply and increasing demand. 
D)  increasing supply and decreasing demand.

Question 17

In 2015, Farmer Lactose's dairy farm lost money. Under the Agricultural Act of 2014 dairy margin protection program, which of the following events would have triggered payments to Farmer Lactose?

Accepted Answer

A)  only the price of milk falling too low 
B)  only the price of feed rising too high 
C)  either the price of milk falling too low or the price of feed rising too high 
D)  if the collective revenue of all dairy farmers in the county fell too low 
A)  only the price of milk falling too low 
B)  only the price of feed rising too high 
C)  either the price of milk falling too low or the price of feed rising too high 
D)  if the collective revenue of all dairy farmers in the county fell too low

Question 18

A major criticism of the parity concept is that

Accepted Answer

A)  it is based on relative prices from a long time ago. 
B)  it is not easily and objectively measured. 
C)  the index is tracked by the government, not the private sector. 
D)  there is no economic rationale for the concept. 
A)  it is based on relative prices from a long time ago. 
B)  it is not easily and objectively measured. 
C)  the index is tracked by the government, not the private sector. 
D)  there is no economic rationale for the concept.

Question 19

The farm price-support programs hurt consumers of the farm products, and moreover, the burden tends to be disproportionately heavier on the low-income consumers.

Accepted Answer

A) True 
 B)False

Question 20

A major feature of the "Freedom to Farm" Act of 1996 was the

Accepted Answer

A)  elimination of price supports and acreage allotments for many agricultural crops. 
B)  expansion of government price supports for many agricultural crops. 
C)  bolstering of the foreign demand for U.S. agricultural products. 
D)  increased support for research on farm productivity to help expand the supply of farm products. 
A)  elimination of price supports and acreage allotments for many agricultural crops. 
B)  expansion of government price supports for many agricultural crops. 
C)  bolstering of the foreign demand for U.S. agricultural products. 
D)  increased support for research on farm productivity to help expand the supply of farm products.

Exam 22: Agriculture: Economics and Policy

(Consider This) Which of the following methods is used by farmers to "hedge" against short-run price and output fluctuations?

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because

The inelastic demand for agricultural products means that a(n)

From 2010 to 2012, Johnny Deer exclusively grew corn. Under the Food, Conservation, and Energy Act of 2008, Deer

The price elasticity of demand for most agricultural products is relatively low.

Which of the following statements is correct?

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

The Agricultural Act of 2014 expanded the direct payments, countercyclical payments, and marketing loans provided by the Food, Conservation, and Energy Act of 2008.

If government establishes a system of price supports, it is in effect setting a

Farm programs such as those of the United States and the European Union

Which of the following best describes the short-run problem faced by farms?

An extraordinarily small crop of farm products due to drought causes

The following factors have boosted farm income per farm household in the U.S., except

The 2014 Agriculture Act in the U.S. eliminated farm subsidies so as to encourage farmers to move their resources to nonfarming production activities.

The demand for agricultural products rises less rapidly than income. This means that the demand for agricultural products is

The federal government has tried to eliminate agricultural surpluses by

In 2015, Farmer Lactose's dairy farm lost money. Under the Agricultural Act of 2014 dairy margin protection program, which of the following events would have triggered payments to Farmer Lactose?

A major criticism of the parity concept is that

The farm price-support programs hurt consumers of the farm products, and moreover, the burden tends to be disproportionately heavier on the low-income consumers.

A major feature of the "Freedom to Farm" Act of 1996 was the

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role 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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