Question 1

The increasing relative importance of agricultural exports has increased the instability of the demand for U.S. farm products.

Accepted Answer

A) True 
 B)False

Question 2

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.E) All of the above
F) C) and D)

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.E) A) and C)
F) A) and D)

Question 4

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.E) None of the above
F) A) and B)

Question 5

A major criticism of agricultural subsidies is that

Accepted Answer

A)  they restrict agricultural output but reduce farm incomes when demand is inelastic.
B)  the principal beneficiaries of these subsidies have been foreign farmers and not domestic farmers.
C)  they duplicate other economic policies that are designed to increase the prices for agricultural products.
D)  they do not address the misallocation of resources between agriculture and the rest of the economy.E) A) and D)
F) A) and C)

Question 6

Increases in incomes usually result in more than proportionate increases in the demand for agricultural products in a growing economy.

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.E) A) and D)
F) All of the above

Question 8

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.E) All of the above
F) C) and D)

Question 9

The inelastic demand for agricultural products means that relatively a small increase in supply will result in a relatively

Accepted Answer

A)  large decrease in farm prices and total revenue for farmers.
B)  small increase in farm prices and total revenue for farmers.
C)  small decrease in farm prices and a relatively large increase in total revenue for farmers.
D)  large increase in farm prices and a relatively small decrease in total revenue for farmers.E) B) and D)
F) B) and C)

Question 10

Refer to the diagram for the corn market. As a consequence of a price support of B, consumers will

Accepted Answer

A)  increase their purchases of the product.
B)  pay a lower price, M rather than A, for the product.
C)  pay a higher price, B rather than A, for the product.
D)  pay a higher price, A rather than M, for the product.E) A) and B)
F) A) and C)

Question 11

In 2017, farm employment constituted about

Accepted Answer

A)  15.8 percent of total employment.
B)  1.2 percent of total employment.
C)  1.6 percent of total employment.
D)  2.6 percent of total employment.E) C) and D)
F) None of the above

Question 12

The price parity concept, which is a cornerstone of U.S. agricultural policy, was established by the

Accepted Answer

A)  Agricultural Income Act of 1914.
B)  Agricultural Adjustment Act of 1933.
C)  Obama administration.
D)  Reagan administration.E) A) and B)
F) All of the above

Question 13

The U.S. Agriculture Act of 2014 did the following, except

Accepted Answer

A)  ending the so-called countercyclical payments to farmers.
B)  extending the direct payments to farmers, which were independent of their crop production.
C)  creating an insurance program, called price loss coverage, which pays farmers if the price of their crop falls below a specified level.
D)  introducing a countywide insurance program called agricultural risk coverage.E) None of the above
F) B) and C)

Question 14

A decrease in the quantity of soybeans produced could result from

Accepted Answer

A)  elimination of farm subsidies to soybean producers.
B)  a decrease in the price of another farm crop that could be grown.
C)  a decrease in the cost of soybean production.
D)  an increase in consumer incomes.E) A) and B)
F) C) and D)

Question 15

A major feature of the "Freedom to Farm" Act of 1996 was the

Accepted Answer

A)  elimination of price supports and acreage allotments for many agricultural crops.
B)  expansion of government price supports for many agricultural crops.
C)  bolstering of the foreign demand for U.S. agricultural products.
D)  increased support for research on farm productivity to help expand the supply of farm products.E) A) and D)
F) C) and D)

Question 16

Which of the following has been an effect of the U.S. government's ethanol program?

Accepted Answer

A)  Prices for crops such as soybeans and sorghum have fallen dramatically.
B)  Prices for beef, pork, and chicken have risen.
C)  Water use has declined, as corn is a less water-intensive crop.
D)  All of these effects have resulted from the ethanol program.E) B) and C)
F) A) and B)

Question 17

The growing importance of export demand for American agriculture has

Accepted Answer

A)  reduced the international value of the dollar.
B)  had no significant effect on the stability of the demand for farm products.
C)  destabilized the total demand for farm products.
D)  stabilized the total demand for farm products.E) A) and B)
F) A) and C)

Question 18

The parity ratio initially stood at 0.5. Then after several years, the prices received by farmers doubled while the prices they paid tripled. This will bring the parity ratio to

Accepted Answer

A)  0.25.
B)  0.33.
C)  0.75.
D)  0.80.E) A) and B)
F) A) and C)

Question 19

Which statement is correct?

Accepted Answer

A)  Farmers fared considerably better than most other economic groups during the Great Depression.
B)  Farmers typically sell their products in highly competitive markets and buy in imperfectly competitive markets.
C)  The principal beneficiaries of government farm subsidies have been the very-low-income farmers.
D)  The use of price supports has accelerated the exodus of resources from agriculture.E) A) and B)
F) A) and C)

Question 20

Historically, many aspects of U.S. farm policies had their origins in the

Accepted Answer

A)  Agricultural Extension Service Act.
B)  Agricultural Adjustment Act.
C)  Homestead Act.
D)  Land Grant Act.E) A) and D)
F) A) and B)

Exam 22: Agriculture: Economics and Policy

The inelastic demand for agricultural products means that relatively a small increase in supply will result in a relatively

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Increases in incomes usually result in more than proportionate increases in the demand for agricultural products in a growing economy.

Correct AnswerverifiedShow Answer

Which of the following has been an effect of the U.S. government's ethanol program?

Correct AnswerverifiedShow Answer

Refer to the diagram for the corn market. As a consequence of a price support of B, consumers will

Correct AnswerverifiedShow Answer

A major feature of the "Freedom to Farm" Act of 1996 was the

Correct AnswerverifiedShow Answer

A decrease in the quantity of soybeans produced could result from

Correct AnswerverifiedShow Answer

Historically, many aspects of U.S. farm policies had their origins in the

Correct AnswerverifiedShow Answer

The increasing relative importance of agricultural exports has increased the instability of the demand for U.S. farm products.

Correct AnswerverifiedShow Answer

The parity ratio initially stood at 0.5. Then after several years, the prices received by farmers doubled while the prices they paid tripled. This will bring the parity ratio to

Correct AnswerverifiedShow Answer

The price parity concept, which is a cornerstone of U.S. agricultural policy, was established by the

Correct AnswerverifiedShow Answer

Over time, technological change has

Correct AnswerverifiedShow Answer

In 2017, farm employment constituted about

Correct AnswerverifiedShow Answer

The growing importance of export demand for American agriculture has

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which statement is correct?

Correct AnswerverifiedShow Answer

The U.S. Agriculture Act of 2014 did the following, except

Correct AnswerverifiedShow Answer

A major criticism of agricultural subsidies is that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An extraordinarily small crop of farm products due to drought causes

Correct AnswerverifiedShow Answer

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