Question 1

Which of the following statements about U.S. agriculture is true as it relates to the past several decades?

Accepted Answer

A)  The demand for farm products has declined, the supply of farm products has increased, and the price of farm products has declined.
B)  The demand for farm products has become both more income elastic and more price elastic.
C)  Minimum efficient scale has increased, the prices of farm products have declined, and the number of farms has declined.
D)  The prices of farm products have increased, minimum efficient scale has declined, and the supply of farm products has been stagnant.E) All of the above
F) B) and C)

Question 2

Refer to the diagram. If farmers produce a normal crop of Qₙ , their gross income

Accepted Answer

A)  will be 0 Pₚ PNQₙ .
B)  will be 0 Pₙ NQₙ .
C)  will be Pₚ × Qₙ .
D)  cannot be determined.E) B) and C)
F) A) and B)

Question 3

Which of the following statements best describes the parity concept?

Accepted Answer

A)  The prices of farm commodities should vary inversely with changes in the prices-paid index for farmers.
B)  Because of productivity increases, farmers are entitled to the same real income for a smaller volume of output.
C)  The money incomes of farmers should always be the same, regardless of increases or decreases in the prices of the products they buy.
D)  The production of a given real output entitles the producer to the same real income over time.E) B) and C)
F) A) and B)

Question 4

If government establishes a system of price supports, it is in effect setting a

Accepted Answer

A)  price ceiling.
B)  price floor.
C)  maximum level of output.
D)  minimum level of output.E) A) and D)
F) None of the above

Question 5

Price supports

Accepted Answer

A)  decrease pollution because participants must practice organic farming.
B)  neither increase nor decrease environmental pollution.
C)  increase pollution because supports encourage the cultivation of marginal land and the use of more pesticides and fertilizers.
D)  discourage rent-seeking activity.E) B) and D)
F) B) and C)

Question 6

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

Question 7

Refer to the table. If government adopts a price support program that sets the price at $9, then there will be a

Accepted Answer

A)  shortage of 100 bushels.
B)  surplus of 100 bushels.
C)  surplus of 120 bushels.
D)  surplus of 160 bushels.E) All of the above
F) A) and C)

Question 8

Which of the following is a major justification for public aid to agriculture in the United States?

Accepted Answer

A)  The demand for farm products is income elastic.
B)  Technological progress has greatly reduced the demand for farm products.
C)  Farmers sell their products in highly imperfect markets and buy resources in highly competitive markets.
D)  Farmers are subject to extraordinary hazards that are hard to insure against.E) A) and C)
F) B) and C)

Question 9

Which of the following statements is correct?

Accepted Answer

A)  Price supports may induce either an underallocation or an overallocation of resources to farm products.
B)  Supported prices have no effect on the allocation of resources to farm products.
C)  Supported prices induce an underallocation of resources to farm products.
D)  Price supports induce an overallocation of resources to farm products.E) C) and D)
F) A) and D)

Question 10

Agriculture is overcrowded because of absolute and relative increases in the size of farm employment.

Accepted Answer

A) True 
 B)False

Question 11

The major economic problem with recent farm policies is that they provide price and income subsidies that

Accepted Answer

A)  are insufficient to keep farmers producing.
B)  increase the demand for farm products.
C)  slow the exodus of resources from agriculture.
D)  limit production to the most profitable products.E) A) and D)
F) A) and C)

Question 12

The Agricultural Act of 2018

Accepted Answer

A)  repealed all of the crop insurance provisions of the 2014 act.
B)  eliminated the price loss coverage provision of the 2014 act.
C)  changed the 2014 act to allow farmers to select which insurance programs to use each year.
D)  reinstated the price supports that were in place prior to implementation of the Freedom to Farm Act of 1996.E) All of the above
F) B) and C)

Question 13

What are the major provisions of the Freedom to Farm Act of 1996?

Accepted Answer

The Freedom to Farm Act ended price supp...

Question 14

Under the Food, Conservation, and Energy Act of 2008, subsidies to farmers based on gaps between actual prices of crops and targeted prices were called

Accepted Answer

A)  direct payments.
B)  price supports.
C)  countercyclical payments.
D)  price gap set-asides.E) A) and B)
F) B) and C)

Question 15

If the demand curve for wheat is inelastic, then total farm income from wheat will be

Accepted Answer

A)  higher in years of low yields and lower in years of high yields.
B)  lower in years of low yields and higher in years of high yields.
C)  higher in years of falling prices.
D)  lower in years of rising prices.E) A) and D)
F) B) and C)

Question 16

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.E) B) and C)
F) A) and B)

Question 17

The movement to eliminate agricultural subsidies in the U.S. and make farmers rely more on market forces, starting with the Farm Act of 1996, continues to this day.

Accepted Answer

A) True 
 B)False

Question 18

The price elasticity of demand for most agricultural products is relatively low.

Accepted Answer

A) True 
 B)False

Question 19

Most of the technological advances in U.S. agriculture are initiated by the following, except

Accepted Answer

A)  government-sponsored agencies.
B)  farmers.
C)  colleges and universities.
D)  suppliers of farm inputs.E) A) and B)
F) None of the above

Question 20

The concept of parity has provided a rationale for government price supports for farm products.

Accepted Answer

A) True 
 B)False

Exam 22: Agriculture: Economics and Policy

If the demand curve for wheat is inelastic, then total farm income from wheat will be

Correct AnswerverifiedShow Answer

Under the Food, Conservation, and Energy Act of 2008, subsidies to farmers based on gaps between actual prices of crops and targeted prices were called

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Agriculture is overcrowded because of absolute and relative increases in the size of farm employment.

Correct AnswerverifiedShow Answer

Refer to the diagram. If farmers produce a normal crop of Qₙ , their gross income

Correct AnswerverifiedShow Answer

Most of the technological advances in U.S. agriculture are initiated by the following, except

Correct AnswerverifiedShow Answer

Which of the following statements about U.S. agriculture is true as it relates to the past several decades?

Correct AnswerverifiedShow Answer

What are the major provisions of the Freedom to Farm Act of 1996?

Correct AnswerverifiedThe Freedom to Farm Act ended price supp...View AnswerShow Answer

Refer to the table. If government adopts a price support program that sets the price at $9, then there will be a

Correct AnswerverifiedShow Answer

Price supports

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The major economic problem with recent farm policies is that they provide price and income subsidies that

Correct AnswerverifiedShow Answer

If government establishes a system of price supports, it is in effect setting a

Correct AnswerverifiedShow Answer

Which of the following statements best describes the parity concept?

Correct AnswerverifiedShow Answer

Price supports in agriculture have been criticized because they

Correct AnswerverifiedShow Answer

The concept of parity has provided a rationale for government price supports for farm products.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The Agricultural Act of 2018

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The movement to eliminate agricultural subsidies in the U.S. and make farmers rely more on market forces, starting with the Farm Act of 1996, continues to this day.

Correct AnswerverifiedShow Answer

Which of the following is a major justification for public aid to agriculture in the United States?

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The price elasticity of demand for most agricultural products is relatively low.

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The Freedom to Farm Act ended price supp...
View Answer

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