Question 1

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 2

(Consider This)In part as a result of the U.S.government's ethanol program,between 2005 and 2012 the inflation-adjusted price of a bushel of corn:

Accepted Answer

A)  tripled. 
B)  rose 200 percent. 
C)  fell 20 percent. 
D)  collapsed to only 5 percent of its pre-2005 level. 
A)  tripled. 
B)  rose 200 percent. 
C)  fell 20 percent. 
D)  collapsed to only 5 percent of its pre-2005 level.

Question 3

The federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following best describes the main problem faced by farms in the long run?

Accepted Answer

A)  Lagging technology has decreased the productivity of farmers and therefore resulted in low farm prices and incomes. 
B)  The highly inelastic nature of agricultural demand 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,farm prices and incomes have therefore declined. 
D)  The demand for farm products has increased relative to their supply,but the highly elastic nature of agricultural demand has caused these shifts to result in declining farm incomes. 
A)  Lagging technology has decreased the productivity of farmers and therefore resulted in low farm prices and incomes. 
B)  The highly inelastic nature of agricultural demand 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,farm prices and incomes have therefore declined. 
D)  The demand for farm products has increased relative to their supply,but the highly elastic nature of agricultural demand has caused these shifts to result in declining farm incomes.

Question 5

(Last Word)The U.S.sugar program has:

Accepted Answer

A)  improved the world allocation of agricultural resources. 
B)  caused the world price of sugar to rise above its domestic price. 
C)  increased domestic sugar production. 
D)  lowered the incomes of U.S.sugar growers. 
A)  improved the world allocation of agricultural resources. 
B)  caused the world price of sugar to rise above its domestic price. 
C)  increased domestic sugar production. 
D)  lowered the incomes of U.S.sugar growers.

Question 6

The principal beneficiaries of government agricultural aid have been the very low-income farmers.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Which of the following would,other things equal,increase the demand for U.S.farm products?

Accepted Answer

A)  Poorer crops abroad. 
B)  Appreciation of the U.S.dollar. 
C)  Deteriorating trade relations with China and Russia. 
D)  Increases in foreign tariffs on imported farm products. 
A)  Poorer crops abroad. 
B)  Appreciation of the U.S.dollar. 
C)  Deteriorating trade relations with China and Russia. 
D)  Increases in foreign tariffs on imported farm products.

Question 9

(Last Word)The U.S.sugar program:

Accepted Answer

A)  decreases the domestic price of sugar. 
B)  requires import quotas or tariffs on foreign sugar. 
C)  increases the export earnings of other sugar-producing countries. 
D)  aids developing countries that produce sugar. 
A)  decreases the domestic price of sugar. 
B)  requires import quotas or tariffs on foreign sugar. 
C)  increases the export earnings of other sugar-producing countries. 
D)  aids developing countries that produce sugar.

Question 10

Which of the following is not characteristic of U.S.agriculture?

Accepted Answer

A)  Productivity has been increasing more slowly in agriculture than in the rest of the economy. 
B)  The demand for agricultural commodities increases less than proportionate to increases in income. 
C)  Resources in agriculture are relatively immobile. 
D)  Demand is inelastic with respect to price. 
A)  Productivity has been increasing more slowly in agriculture than in the rest of the economy. 
B)  The demand for agricultural commodities increases less than proportionate to increases in income. 
C)  Resources in agriculture are relatively immobile. 
D)  Demand is inelastic with respect to price.

Question 11

Under the Food,Conservation,and Energy Act of 2008,subsidies to farmers based on gaps between actual prices of crops and targeted prices are called:

Accepted Answer

A)  direct payments. 
B)  price supports. 
C)  countercyclical payments. 
D)  price gap set-asides. 
A)  direct payments. 
B)  price supports. 
C)  countercyclical payments. 
D)  price gap set-asides.

Question 12

The concept of parity has provided a rationale for government price supports for farm products.

Accepted Answer

A) True 
 B)False

Question 13

U.S.exports of farm products have generally declined as a percentage of U.S.farm output over the past half-century.

Accepted Answer

A) True 
 B)False

Question 14

In 1994,the world's trading nations agreed to:

Accepted Answer

A)  increase export subsidies to reduce world surpluses of farm products. 
B)  reduce agricultural subsidies and tariffs on agricultural imports. 
C)  eliminate all price supports for farm products. 
D)  create an international farm price support system to replace the price support systems of individual countries. 
A)  increase export subsidies to reduce world surpluses of farm products. 
B)  reduce agricultural subsidies and tariffs on agricultural imports. 
C)  eliminate all price supports for farm products. 
D)  create an international farm price support system to replace the price support systems of individual countries.

Question 15

If the prices received by farmers increased and the prices paid by farmers also increased,the parity ratio:

Accepted Answer

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

Question 16

Environmentalists generally support price supports because these subsidies motivate additional farm production.

Accepted Answer

A) True 
 B)False

Question 17

The parity ratio:

Accepted Answer

A)  compares worker productivity in the farm and nonfarm sectors. 
B)  is the ratio of per capita farm income to per capita nonfarm income. 
C)  is the ratio of prices received by farmers to prices paid by farmers. 
D)  is the ratio of prices paid by farmers to prices received by farmers. 
A)  compares worker productivity in the farm and nonfarm sectors. 
B)  is the ratio of per capita farm income to per capita nonfarm income. 
C)  is the ratio of prices received by farmers to prices paid by farmers. 
D)  is the ratio of prices paid by farmers to prices received by farmers.

Question 18

As applied to agriculture,the special-interest effect suggests that:

Accepted Answer

A)  urban legislators support farm legislation in exchange for rural legislators supporting urban-oriented legislation. 
B)  a relatively small number of farmers receive large benefits at the expense of a much larger group of taxpayers who individually suffer small losses. 
C)  politicians support farm subsidies because most of the associated costs are hidden rather than explicit. 
D)  the size of farm subsidies should vary directly with a farmer's earned income. 
A)  urban legislators support farm legislation in exchange for rural legislators supporting urban-oriented legislation. 
B)  a relatively small number of farmers receive large benefits at the expense of a much larger group of taxpayers who individually suffer small losses. 
C)  politicians support farm subsidies because most of the associated costs are hidden rather than explicit. 
D)  the size of farm subsidies should vary directly with a farmer's earned income.

Question 19

If farm state legislators support the food-stamp program to aid the urban poor and urban state legislators in turn support farm subsidies,this is an example of:

Accepted Answer

A)  the special-interest effect. 
B)  political logrolling. 
C)  the paradox of voting. 
D)  cost-benefit analysis. 
A)  the special-interest effect. 
B)  political logrolling. 
C)  the paradox of voting. 
D)  cost-benefit analysis.

Question 20

If the demand for agricultural products is inelastic,a relatively small increase in supply will cause farm prices and incomes to decline.

Accepted Answer

A) True 
 B)False

Exam 21: Agriculture: Economics and Policy

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

(Consider This)In part as a result of the U.S.government's ethanol program,between 2005 and 2012 the inflation-adjusted price of a bushel of corn:

The federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996.

Which of the following best describes the main problem faced by farms in the long run?

(Last Word)The U.S.sugar program has:

The principal beneficiaries of government agricultural aid have been the very low-income farmers.

An extraordinarily small crop of farm products due to drought causes:

Which of the following would,other things equal,increase the demand for U.S.farm products?

(Last Word)The U.S.sugar program:

Which of the following is not characteristic of U.S.agriculture?

Under the Food,Conservation,and Energy Act of 2008,subsidies to farmers based on gaps between actual prices of crops and targeted prices are called:

The concept of parity has provided a rationale for government price supports for farm products.

U.S.exports of farm products have generally declined as a percentage of U.S.farm output over the past half-century.

In 1994,the world's trading nations agreed to:

If the prices received by farmers increased and the prices paid by farmers also increased,the parity ratio:

Environmentalists generally support price supports because these subsidies motivate additional farm production.

The parity ratio:

As applied to agriculture,the special-interest effect suggests that:

If farm state legislators support the food-stamp program to aid the urban poor and urban state legislators in turn support farm subsidies,this is an example of:

If the demand for agricultural products is inelastic,a relatively small increase in supply will cause farm prices and incomes to decline.

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

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