Question 1

Exhibit 39-4  
-Refer to Exhibit 39-4.If the government sets a target price at $5 per bushel,the quantity of wheat produced will be

Accepted Answer

A) 600 bushels. 
B) 700 bushels. 
C) 800 bushels. 
D) 900 bushels. 
E) 1,000 bushels. 
A) 600 bushels. 
B) 700 bushels. 
C) 800 bushels. 
D) 900 bushels. 
E) 1,000 bushels.

Question 2

Demand for a food item increases by more than the supply of the food item.One thing for certain is that

Accepted Answer

A) the price of the food item rises. 
B) income elasticity of demand (for the food item)is greater than 1. 
C) the supply curve is price elastic. 
D) real income rises as a result. 
E) none of the above 
A) the price of the food item rises. 
B) income elasticity of demand (for the food item)is greater than 1. 
C) the supply curve is price elastic. 
D) real income rises as a result. 
E) none of the above

Question 3

Exhibit 39-5  
-Refer to Exhibit 39-5.Low price elasticity of demand for corn coupled with unpredictable weather makes both price and total revenue in the market for corn extremely volatile.Which of the supply curves would result in the least volatility?

Accepted Answer

A) S1. 
B) S2. 
C) S3. 
D) The changes are not dependent upon elasticity of supply. 
A) S1. 
B) S2. 
C) S3. 
D) The changes are not dependent upon elasticity of supply.

Question 4

An agricultural price support is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 5

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 increased agricultural productivity,total revenues for farmers in this market will

Accepted Answer

A) increase if the demand curve is perfectly inelastic. 
B) increase if the demand curve is inelastic between E1 and E2. 
C) decrease if the demand curve is inelastic between E1 and E2. 
D) decrease if the demand curve is inelastic between E1 and E3. 
E) none of the above 
A) increase if the demand curve is perfectly inelastic. 
B) increase if the demand curve is inelastic between E1 and E2. 
C) decrease if the demand curve is inelastic between E1 and E2. 
D) decrease if the demand curve is inelastic between E1 and E3. 
E) none of the above

Question 6

The formula for determining the production flexibility contract payment is:

Accepted Answer

A) contract acreage x 0.75 x yield per acre x crop payment rate. 
B) contract acreage x 0.85 x yield per acre x $1. 
C) contract acreage x 0.85 x yield per acre x crop payment rate. 
D) contract acreage - (0.85 x contract acreage)x yield per acre x crop payment rate. 
E) There is no formula for the production flexibility contract payment.There is only a flat fee that changes annually. 
A) contract acreage x 0.75 x yield per acre x crop payment rate. 
B) contract acreage x 0.85 x yield per acre x $1. 
C) contract acreage x 0.85 x yield per acre x crop payment rate. 
D) contract acreage - (0.85 x contract acreage)x yield per acre x crop payment rate. 
E) There is no formula for the production flexibility contract payment.There is only a flat fee that changes annually.

Question 7

In 2014,the federal government disbanded the practices of fixed direct payments and countercyclical payments to farmers.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 39-9  
-Refer to Exhibit 39-9.Under a price support program,with the price support set at P1,consumers will end up paying a price of

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) There is not enough information to answer the question. 
A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) There is not enough information to answer the question.

Question 9

One of the consequences of an agricultural price support program is

Accepted Answer

A) a surplus. 
B) more exchanges made at the price support. 
C) lower prices paid by consumers. 
D) lower taxes for taxpayers. 
E) a and c 
A) a surplus. 
B) more exchanges made at the price support. 
C) lower prices paid by consumers. 
D) lower taxes for taxpayers. 
E) a and c

Question 10

Evidence seems to indicate that the demand for many agricultural products

Accepted Answer

A) has increased much more than supply over the years. 
B) is relatively elastic. 
C) is relatively inelastic. 
D) is relatively income elastic. 
E) b and d 
A) has increased much more than supply over the years. 
B) is relatively elastic. 
C) is relatively inelastic. 
D) is relatively income elastic. 
E) b and d

Question 11

Farmers as a group generally prefer bad weather to good weather because bad weather shifts the demand curve for their product rightward and raises the price of their product.

Accepted Answer

A) True 
 B)False

Question 12

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Accepted Answer

A) $39,600. 
B) $43,000. 
C) $36,550. 
D) $12,345. 
E) none of the above 
A) $39,600. 
B) $43,000. 
C) $36,550. 
D) $12,345. 
E) none of the above

Question 13

Suppose the demand curve for corn is inelastic between the current price and price that exists after the supply of corn falls.It follows that

Accepted Answer

A) fewer farmers are producing corn at the new price than at the old price. 
B) the total revenue for corn is lower at the new price than at the old price. 
C) the total revenue for corn is higher at the new price than at the old price. 
D) more farmers are producing corn at the new price than at the old price. 
E) a and c 
A) fewer farmers are producing corn at the new price than at the old price. 
B) the total revenue for corn is lower at the new price than at the old price. 
C) the total revenue for corn is higher at the new price than at the old price. 
D) more farmers are producing corn at the new price than at the old price. 
E) a and c

Question 14

Which of the following statements is true?

Accepted Answer

A) In a price support program,consumers end up paying the price support. 
B) In a target price system,consumers end up paying the target price. 
C) In a target price system,the per-unit deficiency payment is equal to the difference between the quantity demanded at the market price and the quantity supplied at the market price. 
D) Acreage allotment programs directly (as opposed to indirectly)raise agricultural product prices. 
E) b and d 
A) In a price support program,consumers end up paying the price support. 
B) In a target price system,consumers end up paying the target price. 
C) In a target price system,the per-unit deficiency payment is equal to the difference between the quantity demanded at the market price and the quantity supplied at the market price. 
D) Acreage allotment programs directly (as opposed to indirectly)raise agricultural product prices. 
E) b and d

Question 15

An agricultural price support

Accepted Answer

A) will create a surplus in the relevant market,assuming the price support is above equilibrium price. 
B) will create a shortage in the relevant market,assuming the price support is above equilibrium price. 
C) is an example of a price floor. 
D) will lead to greater total revenue for farmers if demand (for the product)farmers sell is inelastic between the equilibrium price and the price support (and assuming the price support is above equilibrium price). 
E) a,c,and d 
A) will create a surplus in the relevant market,assuming the price support is above equilibrium price. 
B) will create a shortage in the relevant market,assuming the price support is above equilibrium price. 
C) is an example of a price floor. 
D) will lead to greater total revenue for farmers if demand (for the product)farmers sell is inelastic between the equilibrium price and the price support (and assuming the price support is above equilibrium price). 
E) a,c,and d

Question 16

The demand for farm goods is income inelastic if the percentage change in quantity demanded is __________ the percentage change in __________.

Accepted Answer

A) greater than;income 
B) equal to;income 
C) less than;income 
D) greater than;revenue 
E) less than;revenue 
A) greater than;income 
B) equal to;income 
C) less than;income 
D) greater than;revenue 
E) less than;revenue

Question 17

Suppose that both the demand for and supply of agricultural products increases.If the increase in the supply of agricultural products is greater than the increase in demand,prices of agricultural products

Accepted Answer

A) increase. 
B) decrease. 
C) remain the same. 
D) may increase,decrease,or remain the same. 
A) increase. 
B) decrease. 
C) remain the same. 
D) may increase,decrease,or remain the same.

Question 18

Which of the following government agricultural policies is not aimed at restricting supply?

Accepted Answer

A) price supports 
B) acreage allotments 
C) market quotas 
D) paying farmers not to produce 
A) price supports 
B) acreage allotments 
C) market quotas 
D) paying farmers not to produce

Question 19

When the government institutes a target price,

Accepted Answer

A) a surplus is created. 
B) consumers must pay the target price. 
C) the farmer receives a deficiency payment if the market price is below the target price. 
D) the farmer receives a deficiency payment if the market price is above the target price. 
E) all of the above 
A) a surplus is created. 
B) consumers must pay the target price. 
C) the farmer receives a deficiency payment if the market price is below the target price. 
D) the farmer receives a deficiency payment if the market price is above the target price. 
E) all of the above

Question 20

Exhibit 39-7  
-Refer to Exhibit 39-7.Let E1 represent the initial equilibrium in the market for X.A combination of population growth and an increase in agricultural productivity will likely result in a new equilibrium at

Accepted Answer

A) E2. 
B) E3. 
C) E4. 
D) E5. 
E) E4 or E5,depending on the extent of income elasticity of demand. 
A) E2. 
B) E3. 
C) E4. 
D) E5. 
E) E4 or E5,depending on the extent of income elasticity of demand.

Exam 26: Stocks, bonds, futures, and Options

Exhibit 39-4 -Refer to Exhibit 39-4.If the government sets a target price at $5 per bushel,the quantity of wheat produced will be

Demand for a food item increases by more than the supply of the food item.One thing for certain is that

Exhibit 39-5 -Refer to Exhibit 39-5.Low price elasticity of demand for corn coupled with unpredictable weather makes both price and total revenue in the market for corn extremely volatile.Which of the supply curves would result in the least volatility?

An agricultural price support is an example of a price ceiling.

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 increased agricultural productivity,total revenues for farmers in this market will

The formula for determining the production flexibility contract payment is:

In 2014,the federal government disbanded the practices of fixed direct payments and countercyclical payments to farmers.

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P1,consumers will end up paying a price of

One of the consequences of an agricultural price support program is

Evidence seems to indicate that the demand for many agricultural products

Farmers as a group generally prefer bad weather to good weather because bad weather shifts the demand curve for their product rightward and raises the price of their product.

A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Suppose the demand curve for corn is inelastic between the current price and price that exists after the supply of corn falls.It follows that

Which of the following statements is true?

An agricultural price support

The demand for farm goods is income inelastic if the percentage change in quantity demanded is __________ the percentage change in __________.

Suppose that both the demand for and supply of agricultural products increases.If the increase in the supply of agricultural products is greater than the increase in demand,prices of agricultural products

Which of the following government agricultural policies is not aimed at restricting supply?

When the government institutes a target price,

Exhibit 39-7 -Refer to Exhibit 39-7.Let E1 represent the initial equilibrium in the market for X.A combination of population growth and an increase in agricultural productivity will likely result in a new equilibrium at

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

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Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

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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 increased agricultural productivity,total revenues for farmers in this market will

Exhibit 39-9 -Refer to Exhibit 39-9.Under a price support program,with the price support set at P₁,consumers will end up paying a price of

The demand for farm goods is income inelastic if the percentage change in quantity demanded is the percentage change in .

Exhibit 39-7 -Refer to Exhibit 39-7.Let E₁ represent the initial equilibrium in the market for X.A combination of population growth and an increase in agricultural productivity will likely result in a new equilibrium at