Question 1

If the demand for foodstuffs is inelastic,which of the following positions would be most beneficial to Farmer Jones?

Accepted Answer

A) Bad weather for Jones and good weather for all other farmers. 
B) Bad weather for all farmers except Jones (who witnesses good weather). 
C) Bad weather for all farmers. 
D) Good weather for all farmers. 
E) There is not enough information to answer the question. 
A) Bad weather for Jones and good weather for all other farmers. 
B) Bad weather for all farmers except Jones (who witnesses good weather). 
C) Bad weather for all farmers. 
D) Good weather for all farmers. 
E) There is not enough information to answer the question.

Question 2

The major way that the government supports crop prices is by granting nonrecourse loans to farmers.

Accepted Answer

A) True 
 B)False

Question 3

If income elasticity of demand for food is 1.55 it follows that

Accepted Answer

A) a 10 percent rise in the price of food lowers the quantity demanded of food by 15.5 percent. 
B) if income rises by 10 percent,consumption of food rises by 15.5 percent. 
C) if income rises by 10 percent,consumption of food falls by 15.5 percent. 
D) a 1 percent rise in the price of food decreases the quantity demanded of food by 1.55 percent. 
E) none of the above 
A) a 10 percent rise in the price of food lowers the quantity demanded of food by 15.5 percent. 
B) if income rises by 10 percent,consumption of food rises by 15.5 percent. 
C) if income rises by 10 percent,consumption of food falls by 15.5 percent. 
D) a 1 percent rise in the price of food decreases the quantity demanded of food by 1.55 percent. 
E) none of the above

Question 4

Exhibit 39-3  
-Refer to Exhibit 39-3.If P3 is a price support,the amount sold on private markets is

Accepted Answer

A) Q1. 
B) Q2. 
C) Q3. 
D) Q2 - Q3. 
E) Q1 - Q3. 
A) Q1. 
B) Q2. 
C) Q3. 
D) Q2 - Q3. 
E) Q1 - Q3.

Question 5

Exhibit 39-4  
-Refer to Exhibit 39-4.The price support of $6 per bushel would cost the government

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 6

Exhibit 39-1  
-Refer to Exhibit 39-1.Given the target price PT,what is the quantity supplied?

Accepted Answer

A) Q1 
B) Q2 
C) Q3 
D) Q3 - Q1 
A) Q1 
B) Q2 
C) Q3 
D) Q3 - Q1

Question 7

Under the target price system,

Accepted Answer

A) supply is restricted. 
B) consumers must pay the target price. 
C) payments are made to the government when the price paid by consumers rises above the target price. 
D) farmers are paid a deficiency payment if the market price for their goods is below the target price. 
E) a and c 
A) supply is restricted. 
B) consumers must pay the target price. 
C) payments are made to the government when the price paid by consumers rises above the target price. 
D) farmers are paid a deficiency payment if the market price for their goods is below the target price. 
E) a and c

Question 8

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

Accepted Answer

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

Question 9

Exhibit 39-4  
-Refer to Exhibit 39-4.If the government sets a target price at $5 per bushel,consumers will end up paying __________ for the quantity of wheat they purchase.

Accepted Answer

A) $1,000 
B) $2,000 
C) $3,000 
D) $4,000 
E) $5,000 
A) $1,000 
B) $2,000 
C) $3,000 
D) $4,000 
E) $5,000

Question 10

For farmers as a group,increased productivity can lead to lower incomes.

Accepted Answer

A) True 
 B)False

Question 11

A government agricultural policy that sets a limit on the quantity of a product that a farmer is allowed to bring to market is the

Accepted Answer

A) marketing quota system. 
B) acreage allotment program. 
C) price support program. 
D) target price system. 
E) paying farmers not to produce system. 
A) marketing quota system. 
B) acreage allotment program. 
C) price support program. 
D) target price system. 
E) paying farmers not to produce system.

Question 12

Bad weather is likely to

Accepted Answer

A) raise the total revenue farmers receive for their foodstuffs,assuming that demand for their products is inelastic. 
B) lower the total revenue farmers receive for their foodstuffs,assuming that demand for their products is elastic. 
C) leave the total revenue farmers receive for their foodstuffs unchanged. 
D) change the income elasticity of demand for food. 
E) c and d 
A) raise the total revenue farmers receive for their foodstuffs,assuming that demand for their products is inelastic. 
B) lower the total revenue farmers receive for their foodstuffs,assuming that demand for their products is elastic. 
C) leave the total revenue farmers receive for their foodstuffs unchanged. 
D) change the income elasticity of demand for food. 
E) c and d

Question 13

The combination of low 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 14

Exhibit 39-4  
-Refer to Exhibit 39-4.At a target price of $4 per bushel,how much does the private sector spend on wheat?

Accepted Answer

A) $2,400 
B) $1,800 
C) $2,800 
D) $3,600 
A) $2,400 
B) $1,800 
C) $2,800 
D) $3,600

Question 15

Suppose farmers agree to reduce their supply of foodstuffs.The most likely reason they would want to do this is they believe that less supply

Accepted Answer

A) means higher prices and higher total revenue. 
B) means consumers will buy more of what they have to sell. 
C) translates into higher-quality foodstuffs and that the higher the quality of the foodstuffs they sell,the higher the prices for what they sell. 
D) will get Congress to favor them with agriculture subsidies. 
E) will get Congress to decrease their taxes. 
A) means higher prices and higher total revenue. 
B) means consumers will buy more of what they have to sell. 
C) translates into higher-quality foodstuffs and that the higher the quality of the foodstuffs they sell,the higher the prices for what they sell. 
D) will get Congress to favor them with agriculture subsidies. 
E) will get Congress to decrease their taxes.

Question 16

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Accepted Answer

A) history of production. 
B) income. 
C) location. 
D) b and c 
E) none of the above 
A) history of production. 
B) income. 
C) location. 
D) b and c 
E) none of the above

Question 17

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions,then

Accepted Answer

A) price changes are likely to be small,and farm revenues are likely to be highly volatile. 
B) price changes are likely to be large,and farm revenues are likely to be highly volatile. 
C) prices are likely to be constant,and farm revenues are likely to be constant. 
D) prices are likely to be constant,and farm revenues are likely to be highly volatile. 
E) price changes are likely to be small,and farm revenues are likely to be constant. 
A) price changes are likely to be small,and farm revenues are likely to be highly volatile. 
B) price changes are likely to be large,and farm revenues are likely to be highly volatile. 
C) prices are likely to be constant,and farm revenues are likely to be constant. 
D) prices are likely to be constant,and farm revenues are likely to be highly volatile. 
E) price changes are likely to be small,and farm revenues are likely to be constant.

Question 18

Increased productivity in agriculture leads to lower prices for consumers and higher revenues for farmers.

Accepted Answer

A) True 
 B)False

Question 19

Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows.

Accepted Answer

To avoid the risk of lower prices in the

Question 20

An increase in the supply of corn will lower the total revenue from corn if

Accepted Answer

A) the demand curve for corn is inelastic between the current and new price of corn. 
B) the demand curve for corn is elastic between the current and new price of corn. 
C) there are many substitutes for corn. 
D) there are only a few substitutes for corn. 
E) none of the above 
A) the demand curve for corn is inelastic between the current and new price of corn. 
B) the demand curve for corn is elastic between the current and new price of corn. 
C) there are many substitutes for corn. 
D) there are only a few substitutes for corn. 
E) none of the above

Exam 26: Stocks, bonds, futures, and Options

If the demand for foodstuffs is inelastic,which of the following positions would be most beneficial to Farmer Jones?

The major way that the government supports crop prices is by granting nonrecourse loans to farmers.

If income elasticity of demand for food is 1.55 it follows that

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a price support,the amount sold on private markets is

Exhibit 39-4 -Refer to Exhibit 39-4.The price support of $6 per bushel would cost the government

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price PT,what is the quantity supplied?

Under the target price system,

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

Exhibit 39-4 -Refer to Exhibit 39-4.If the government sets a target price at $5 per bushel,consumers will end up paying __________ for the quantity of wheat they purchase.

For farmers as a group,increased productivity can lead to lower incomes.

A government agricultural policy that sets a limit on the quantity of a product that a farmer is allowed to bring to market is the

Bad weather is likely to

The combination of low 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 39-4 -Refer to Exhibit 39-4.At a target price of $4 per bushel,how much does the private sector spend on wheat?

Suppose farmers agree to reduce their supply of foodstuffs.The most likely reason they would want to do this is they believe that less supply

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions,then

Increased productivity in agriculture leads to lower prices for consumers and higher revenues for farmers.

Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows.

An increase in the supply of corn will lower the total revenue from corn if

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: 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

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

Filters

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a price support,the amount sold on private markets is

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price P_T,what is the quantity supplied?

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