Question 1

Exhibit 39-9  
-Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Accepted Answer

A) P2 - P4. 
B) P1 - P3. 
C) P2 - P3. 
D) P1 - P2. 
E) none of the above 
A) P2 - P4. 
B) P1 - P3. 
C) P2 - P3. 
D) P1 - P2. 
E) none of the above

Question 2

Exhibit 39-1  
-Refer to Exhibit 39-1.At a support price of PT,private sector spending on this good equals

Accepted Answer

A) PT x Q3. 
B) PT x Q2. 
C) P1 x Q3. 
D) P1 x Q2. 
A) PT x Q3. 
B) PT x Q2. 
C) P1 x Q3. 
D) P1 x Q2.

Question 3

Exhibit 39-4  
-Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

Accepted Answer

A) 0 
B) 200 
C) 700 
D) 900 
A) 0 
B) 200 
C) 700 
D) 900

Question 4

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Accepted Answer

A) a price support. 
B) an acreage allotment program. 
C) a target price. 
D) any of the above 
A) a price support. 
B) an acreage allotment program. 
C) a target price. 
D) any of the above

Question 5

Exhibit 39-4  
-Refer to Exhibit 39-4.At a target price of $4 per bushel,what price does the consumer pay?

Accepted Answer

A) $5 
B) $4 
C) $3 
D) $2 
A) $5 
B) $4 
C) $3 
D) $2

Question 6

Under the target price program,

Accepted Answer

A) the government ends up buying the surplus product that results. 
B) taxpayers pay the difference between the price consumers pay and the target price. 
C) deficiency payments are made to both rich and poor farmers. 
D) the surplus that results is sometimes dumped or otherwise wasted. 
E) b and c 
A) the government ends up buying the surplus product that results. 
B) taxpayers pay the difference between the price consumers pay and the target price. 
C) deficiency payments are made to both rich and poor farmers. 
D) the surplus that results is sometimes dumped or otherwise wasted. 
E) b and c

Question 7

Which of the following combinations of factors comes closest to describing the situation in agriculture?

Accepted Answer

A) elastic demand for agricultural products and large swings in supply 
B) elastic demand for agricultural products and small swings in supply 
C) inelastic demand for agricultural products and constant supply 
D) inelastic demand for agricultural products and large swings in supply 
E) none of the above 
A) elastic demand for agricultural products and large swings in supply 
B) elastic demand for agricultural products and small swings in supply 
C) inelastic demand for agricultural products and constant supply 
D) inelastic demand for agricultural products and large swings in supply 
E) none of the above

Question 8

Exhibit 39-8  
-Refer to Exhibit 39-8.Assume that E1 represents the initial equilibrium in the market for grain X.As a result of a breakthrough in genetic engineering that develops an insect-resistant variety of grain X,

Accepted Answer

A) the supply curve shifts leftward. 
B) the equilibrium quantity increases. 
C) the equilibrium price rises. 
D) all of the above 
E) a and c 
A) the supply curve shifts leftward. 
B) the equilibrium quantity increases. 
C) the equilibrium price rises. 
D) all of the above 
E) a and c

Question 9

Assume that the farmers know that their revenues would increase if each would take a certain amount of acreage out of production.An agreement to do so

Accepted Answer

A) would not be made because the farmers have no incentive to enter into it. 
B) would not be made because it would contradict the assumption that farmers are profit maximizers. 
C) probably would not be adhered to,if made,because it would be disadvantageous for the farmers as a group. 
D) probably would not last,if made,because each farmer would have an incentive to break it. 
A) would not be made because the farmers have no incentive to enter into it. 
B) would not be made because it would contradict the assumption that farmers are profit maximizers. 
C) probably would not be adhered to,if made,because it would be disadvantageous for the farmers as a group. 
D) probably would not last,if made,because each farmer would have an incentive to break it.

Question 10

Suppose iceberg lettuce has an income elasticity of demand of 0.35.A 10 percent increase in income causes the quantity demanded of iceberg lettuce to _______________ by ______________ percent.

Accepted Answer

A) rise;3.5 
B) rise;28.57 
C) fall;28.57 
D) fall;3.5 
A) rise;3.5 
B) rise;28.57 
C) fall;28.57 
D) fall;3.5

Question 11

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

Accepted Answer

A) marketing quota system. 
B) acreage allotment program. 
C) price support program. 
D) target price system. 
A) marketing quota system. 
B) acreage allotment program. 
C) price support program. 
D) target price system.

Question 12

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Accepted Answer

A) causes prices to fall. 
B) causes prices to rise. 
C) causes prices to remain constant. 
D) may cause prices to rise,fall,or remain the same,depending upon the relative shifts in the supply and demand curves. 
A) causes prices to fall. 
B) causes prices to rise. 
C) causes prices to remain constant. 
D) may cause prices to rise,fall,or remain the same,depending upon the relative shifts in the supply and demand curves.

Question 13

Which of the following best describes the agricultural sector for much of the 20th century and today?

Accepted Answer

A) high productivity,price elasticity of demand less than 1,income elasticity of demand greater than 1 
B) low productivity,price elasticity of demand greater than 1,income elasticity of demand less than 1 
C) high productivity,price elasticity of demand less than 1,income elasticity of demand less than 1 
D) low productivity,price elasticity of demand less than 1,income elasticity of demand greater than 1 
A) high productivity,price elasticity of demand less than 1,income elasticity of demand greater than 1 
B) low productivity,price elasticity of demand greater than 1,income elasticity of demand less than 1 
C) high productivity,price elasticity of demand less than 1,income elasticity of demand less than 1 
D) low productivity,price elasticity of demand less than 1,income elasticity of demand greater than 1

Question 14

If the government establishes a price floor for agricultural products,then

Accepted Answer

A) consumers will pay a lower price for the products. 
B) consumers will increase the quantity that they are willing to consume. 
C) farmers will want to decrease their production. 
D) the government will need to purchase the resulting surplus. 
E) all of the above 
A) consumers will pay a lower price for the products. 
B) consumers will increase the quantity that they are willing to consume. 
C) farmers will want to decrease their production. 
D) the government will need to purchase the resulting surplus. 
E) all of the above

Question 15

Exhibit 39-3  
-Refer to Exhibit 39-3.If P3 is a target price,the deficiency payment per unit is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P3 - P1. 
E) P3 - P2. 
A) P1. 
B) P2. 
C) P3. 
D) P3 - P1. 
E) P3 - P2.

Question 16

Rising demand for an agricultural good __________ the payments government is committed to pay farmers under a __________ program.

Accepted Answer

A) raises;production flexibility contract 
B) raises;deficiency payment 
C) lowers;production flexibility contract 
D) lowers;deficiency payment 
A) raises;production flexibility contract 
B) raises;deficiency payment 
C) lowers;production flexibility contract 
D) lowers;deficiency payment

Question 17

Here are four positions that Farmer Gomez can be in: (1)bad weather for Gomez and good weather for all other farmers; (2)bad weather for all farmers except Gomez (who witnesses good weather); (3)bad weather for all farmers; (4)good weather for all farmers.Assuming the demand for foodstuffs is inelastic,Farmer Gomez would probably rank these four positions,from best for him to worst for him,the following way:

Accepted Answer

A) 1,2,3,4. 
B) 2,1,3,4. 
C) 2,3,4,1. 
D) 4,3,2,1. 
E) 3,4,1,2. 
A) 1,2,3,4. 
B) 2,1,3,4. 
C) 2,3,4,1. 
D) 4,3,2,1. 
E) 3,4,1,2.

Question 18

When productivity increases in the production of agricultural products,the supply curve for agricultural products shifts rightward.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an effect of an agricultural price support?

Accepted Answer

A) a surplus 
B) fewer exchanges 
C) higher prices paid by consumers 
D) government purchase and storage of surplus 
E) higher-quality products 
A) a surplus 
B) fewer exchanges 
C) higher prices paid by consumers 
D) government purchase and storage of surplus 
E) higher-quality products

Question 20

Which of the following statements is false?

Accepted Answer

A) There are fewer farms in this country today than there were earlier in this century. 
B) In 2000,there were 8 million farms in the United States. 
C) Bad weather reduces the supply of foodstuffs and leads to greater farmer total revenue,assuming demand for the foodstuffs is inelastic. 
D) b and c 
A) There are fewer farms in this country today than there were earlier in this century. 
B) In 2000,there were 8 million farms in the United States. 
C) Bad weather reduces the supply of foodstuffs and leads to greater farmer total revenue,assuming demand for the foodstuffs is inelastic. 
D) b and c

Exam 26: Stocks, bonds, futures, and Options

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Exhibit 39-1 -Refer to Exhibit 39-1.At a support price of PT,private sector spending on this good equals

Exhibit 39-4 -Refer to Exhibit 39-4.Under a price support program of $4 per bushel,how many bushels of surplus wheat does the government purchase?

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Exhibit 39-4 -Refer to Exhibit 39-4.At a target price of $4 per bushel,what price does the consumer pay?

Under the target price program,

Which of the following combinations of factors comes closest to describing the situation in agriculture?

Exhibit 39-8 -Refer to Exhibit 39-8.Assume that E1 represents the initial equilibrium in the market for grain X.As a result of a breakthrough in genetic engineering that develops an insect-resistant variety of grain X,

Assume that the farmers know that their revenues would increase if each would take a certain amount of acreage out of production.An agreement to do so

Suppose iceberg lettuce has an income elasticity of demand of 0.35.A 10 percent increase in income causes the quantity demanded of iceberg lettuce to _______________ by ______________ percent.

A government agricultural policy in which a guaranteed price is set and no surplus is created is the

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Which of the following best describes the agricultural sector for much of the 20th century and today?

If the government establishes a price floor for agricultural products,then

Exhibit 39-3 -Refer to Exhibit 39-3.If P3 is a target price,the deficiency payment per unit is

Rising demand for an agricultural good __________ the payments government is committed to pay farmers under a __________ program.

When productivity increases in the production of agricultural products,the supply curve for agricultural products shifts rightward.

Which of the following is not an effect of an agricultural price support?

Which of the following statements is false?

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 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P₁,the per-unit deficiency payment will be:

Exhibit 39-1 -Refer to Exhibit 39-1.At a support price of P_T,private sector spending on this good equals

Exhibit 39-8 -Refer to Exhibit 39-8.Assume that E₁ represents the initial equilibrium in the market for grain X.As a result of a breakthrough in genetic engineering that develops an insect-resistant variety of grain X,

Suppose iceberg lettuce has an income elasticity of demand of 0.35.A 10 percent increase in income causes the quantity demanded of iceberg lettuce to _ by percent.

Exhibit 39-3 -Refer to Exhibit 39-3.If P₃ is a target price,the deficiency payment per unit is

Rising demand for an agricultural good the payments government is committed to pay farmers under a program.