Question 1

Which of the following arguments is not generally made to justify farm subsidies?

Accepted Answer

A)  The "family farm" is an American institution that should be protected and nurtured. 
B)  Agribusiness firms need subsidies to achieve economies of scale. 
C)  Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms. 
D)  Farmers cannot fully insure themselves against the risks unusual to farming,such as floods,droughts,and pests. 
A)  The "family farm" is an American institution that should be protected and nurtured. 
B)  Agribusiness firms need subsidies to achieve economies of scale. 
C)  Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms. 
D)  Farmers cannot fully insure themselves against the risks unusual to farming,such as floods,droughts,and pests.

Question 2

Domestic price supports on,say,sugar:

Accepted Answer

A)  generate trade barriers to reduce imports of foreign sugar. 
B)  increase world sugar prices. 
C)  keep the domestic price of sugar artificially low. 
D)  increase the earnings of foreign sugar producers. 
A)  generate trade barriers to reduce imports of foreign sugar. 
B)  increase world sugar prices. 
C)  keep the domestic price of sugar artificially low. 
D)  increase the earnings of foreign sugar producers.

Question 3

Over time,technological change has:

Accepted Answer

A)  reduced both the price elasticity and income elasticity of the demand for farm products. 
B)  reduced the minimum efficient scale of production in agriculture and increased the prices of farm products. 
C)  increased both price elasticity and income elasticity of the demand for farm products. 
D)  increased the minimum efficient scale of production in agriculture and reduced the prices of farm products. 
A)  reduced both the price elasticity and income elasticity of the demand for farm products. 
B)  reduced the minimum efficient scale of production in agriculture and increased the prices of farm products. 
C)  increased both price elasticity and income elasticity of the demand for farm products. 
D)  increased the minimum efficient scale of production in agriculture and reduced the prices of farm products.

Question 4

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

Accepted Answer

A)  cost U.S.consumers much more than it has benefited U.S.sugar producers. 
B)  cost U.S.consumers much less than it has benefited U.S.sugar producers. 
C)  reduced the price of sugar to U.S.consumers. 
D)  increased sugar imports as a percentage of U.S.sugar consumption. 
A)  cost U.S.consumers much more than it has benefited U.S.sugar producers. 
B)  cost U.S.consumers much less than it has benefited U.S.sugar producers. 
C)  reduced the price of sugar to U.S.consumers. 
D)  increased sugar imports as a percentage of U.S.sugar consumption.

Question 5

The demand for agricultural products is:

Accepted Answer

A)  relatively elastic with respect to price. 
B)  relatively inelastic with respect to price. 
C)  relatively elastic with respect to income. 
D)  downsloping to the individual farmer but perfectly elastic to farmers as a group. 
A)  relatively elastic with respect to price. 
B)  relatively inelastic with respect to price. 
C)  relatively elastic with respect to income. 
D)  downsloping to the individual farmer but perfectly elastic to farmers as a group.

Question 6

The Food,Conservation,and Energy Act of 2008:

Accepted Answer

A)  ended 60 years of U.S.price supports for American grain crops. 
B)  restored the U.S.price support system (for currently grown crops)that was ended in the Freedom to Farm Act of 1996. 
C)  ended the "freedom to plant" approach of the Freedom to Farm Act of 1996 and restored acreage allotments. 
D)  maintained the "freedom to plant" and "direct-payment" features of the Freedom to Farm Act of 1996,and also provides countercyclical payments and marketing loans to assist farmers. 
A)  ended 60 years of U.S.price supports for American grain crops. 
B)  restored the U.S.price support system (for currently grown crops)that was ended in the Freedom to Farm Act of 1996. 
C)  ended the "freedom to plant" approach of the Freedom to Farm Act of 1996 and restored acreage allotments. 
D)  maintained the "freedom to plant" and "direct-payment" features of the Freedom to Farm Act of 1996,and also provides countercyclical payments and marketing loans to assist farmers.

Question 7

An international agreement reached in 1994 by the world's trading nations provides for:

Accepted Answer

A)  an increase in export subsidies on agricultural products. 
B)  an increase in agricultural price supports. 
C)  a reduction of tariffs on agricultural products. 
D)  an international research organization designed to discover nonfood uses of agricultural output. 
A)  an increase in export subsidies on agricultural products. 
B)  an increase in agricultural price supports. 
C)  a reduction of tariffs on agricultural products. 
D)  an international research organization designed to discover nonfood uses of agricultural output.

Question 8

(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 9

Acreage allotment programs were designed to:

Accepted Answer

A)  reduce the supply of agricultural products. 
B)  make the demand for farm products more price elastic. 
C)  bolster the demand for agricultural commodities. 
D)  accelerate the movement of human resources out of farming. 
A)  reduce the supply of agricultural products. 
B)  make the demand for farm products more price elastic. 
C)  bolster the demand for agricultural commodities. 
D)  accelerate the movement of human resources out of farming.

Question 10

Farm groups spend considerable amounts of money to maintain and enlarge political support for farm subsidies.This illustrates:

Accepted Answer

A)  coalitions. 
B)  rent-seeking activity. 
C)  the special-interest effect. 
D)  the voting paradox. 
A)  coalitions. 
B)  rent-seeking activity. 
C)  the special-interest effect. 
D)  the voting paradox.

Question 11

The use of price-support programs in agriculture has hastened the exodus of resources from agriculture.

Accepted Answer

A) True 
 B)False

Question 12

Price supports in agriculture have been criticized because they:

Accepted Answer

A)  have hastened the exodus of labor from agriculture. 
B)  subsidize consumers at the expense of farmers. 
C)  help large farmers more than small farmers. 
D)  create product shortages. 
A)  have hastened the exodus of labor from agriculture. 
B)  subsidize consumers at the expense of farmers. 
C)  help large farmers more than small farmers. 
D)  create product shortages.

Question 13

The purpose of the Freedom to Farm Act of 1996 was to:

Accepted Answer

A)  immediately end U.S.farm subsidies. 
B)  end 60 years of U.S.price supports for American grain crops. 
C)  eliminate U.S.tariffs and quotas on imported farm goods. 
D)  stabilize short-run crop prices. 
A)  immediately end U.S.farm subsidies. 
B)  end 60 years of U.S.price supports for American grain crops. 
C)  eliminate U.S.tariffs and quotas on imported farm goods. 
D)  stabilize short-run crop prices.

Question 14

The demand for agricultural products:

Accepted Answer

A)  has a price elasticity coefficient of about 0.20 to 0.25. 
B)  is elastic with respect to income but inelastic with respect to price. 
C)  has been decreasing about 8 percent per year. 
D)  has been rising more rapidly than the national income. 
A)  has a price elasticity coefficient of about 0.20 to 0.25. 
B)  is elastic with respect to income but inelastic with respect to price. 
C)  has been decreasing about 8 percent per year. 
D)  has been rising more rapidly than the national income.

Question 15

Import quotas on sugar may cost consumers $2 billion per year.But this quota goes unchallenged because the $10 average annual cost per person is so small that probably not one voter in 200 knows the quota exists.This statement describes:

Accepted Answer

A)  the voting paradox. 
B)  the special-interest effect. 
C)  the median-voter model. 
D)  free-rider problem. 
A)  the voting paradox. 
B)  the special-interest effect. 
C)  the median-voter model. 
D)  free-rider problem.

Question 16

Ward Planter exclusively grew soybeans in each of the past three years and currently participates in the marketing loan program of the Food,Conservation,and Energy Act of 2008.If the "crop price" of soybeans at harvest is less than the pre-harvest "loan price," Planter can:

Accepted Answer

A)  sell his crop in the market and receive the difference between the crop price and loan price as a direct payment from the federal government. 
B)  take a "crop credit" based on the difference between the crop price and the loan price and use the credit to reduce federal income taxes owed. 
C)  receive an "emergency loan" that can be paid back over the following five years. 
D)  forfeit the harvest to the lender and be free of the loan,thus receiving a subsidy because the proceeds from the loan exceed the revenues from the sale of the crop in the market. 
A)  sell his crop in the market and receive the difference between the crop price and loan price as a direct payment from the federal government. 
B)  take a "crop credit" based on the difference between the crop price and the loan price and use the credit to reduce federal income taxes owed. 
C)  receive an "emergency loan" that can be paid back over the following five years. 
D)  forfeit the harvest to the lender and be free of the loan,thus receiving a subsidy because the proceeds from the loan exceed the revenues from the sale of the crop in the market.

Question 17

The demand for most agricultural products is:

Accepted Answer

A)  elastic with respect to price but inelastic with respect to income. 
B)  inelastic with respect to price but elastic with respect to income. 
C)  elastic with respect to both price and income. 
D)  inelastic with respect to both price and income. 
A)  elastic with respect to price but inelastic with respect to income. 
B)  inelastic with respect to price but elastic with respect to income. 
C)  elastic with respect to both price and income. 
D)  inelastic with respect to both price and income.

Question 18

Currently (2009)farm employment is about:

Accepted Answer

A)  15.8 percent of total employment. 
B)  9.4 percent of total employment. 
C)  1.1 percent of total employment. 
D)  1.8 percent of total employment. 
A)  15.8 percent of total employment. 
B)  9.4 percent of total employment. 
C)  1.1 percent of total employment. 
D)  1.8 percent of total employment.

Question 19

Over the past several decades,farm employment has:

Accepted Answer

A)  grown absolutely but declined as a percentage of total employment. 
B)  declined both absolutely and as a percentage of total employment. 
C)  increased both absolutely and as a percentage of total employment. 
D)  declined absolutely but increased as a percentage of total employment. 
A)  grown absolutely but declined as a percentage of total employment. 
B)  declined both absolutely and as a percentage of total employment. 
C)  increased both absolutely and as a percentage of total employment. 
D)  declined absolutely but increased as a percentage of total employment.

Question 20

About 10 percent of the U.S.labor force is in agriculture.

Accepted Answer

A) True 
 B)False

Exam 21: Agriculture: Economics and Policy

Which of the following arguments is not generally made to justify farm subsidies?

Domestic price supports on,say,sugar:

Over time,technological change has:

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

The demand for agricultural products is:

The Food,Conservation,and Energy Act of 2008:

An international agreement reached in 1994 by the world's trading nations provides for:

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

Acreage allotment programs were designed to:

Farm groups spend considerable amounts of money to maintain and enlarge political support for farm subsidies.This illustrates:

The use of price-support programs in agriculture has hastened the exodus of resources from agriculture.

Price supports in agriculture have been criticized because they:

The purpose of the Freedom to Farm Act of 1996 was to:

The demand for agricultural products:

Import quotas on sugar may cost consumers $2 billion per year.But this quota goes unchallenged because the $10 average annual cost per person is so small that probably not one voter in 200 knows the quota exists.This statement describes:

Ward Planter exclusively grew soybeans in each of the past three years and currently participates in the marketing loan program of the Food,Conservation,and Energy Act of 2008.If the "crop price" of soybeans at harvest is less than the pre-harvest "loan price," Planter can:

The demand for most agricultural products is:

Currently (2009)farm employment is about:

Over the past several decades,farm employment has:

About 10 percent of the U.S.labor force is in agriculture.

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

Filters