Question 1

Farmers typically sell their products in highly competitive markets and buy in imperfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 2

The percentage of total employment in the U.S. that is accounted for by farms has been declining in the last six decades or so, but the absolute number of farm employment has actually risen slightly over those decades.

Accepted Answer

A) True 
 B)False

Question 3

If the prices received by farmers increased and the prices paid by farmers also increased, the parity ratio

Accepted Answer

A)  will necessarily be unchanged.
B)  may either increase or decrease.
C)  will necessarily increase.
D)  will necessarily decline.E) A) and B)
F) None of the above

Question 4

A bumper crop of farm products causes

Accepted Answer

A)  only a slight decline in the price of farm products because the demand for farm products is income inelastic.
B)  a large decline in the price of farm products because the demand for farm products is price inelastic.
C)  only a slight decline in the price of farm products because the demand for farm products is income elastic.
D)  a large decline in the price of farm products because the demand for farm products is price elastic.E) B) and C)
F) A) and B)

Question 5

Refer to the table. If government adopts a price support program that sets the price at $7, then the total amount that government will pay to farmers of this product is

Accepted Answer

A)  $980.
B)  $560.
C)  $180.
D)  $1,540.E) None of the above
F) All of the above

Question 6

With a fixed level of farm production, a given shift in demand for a crop will cause a

Accepted Answer

A)  small price change if demand is quite inelastic.
B)  more dramatic price change if demand is quite elastic.
C)  more dramatic price change if demand is quite inelastic.
D)  similar amount of price change regardless of whether demand is elastic or not.E) B) and C)
F) C) and D)

Question 7

Farm employment in the United States amounted to about what percentage of the total employment in 2017?

Accepted Answer

A)  less than 2 percent
B)  about 8 percent
C)  about 15 percent
D)  close to 20 percentE) B) and C)
F) A) and C)

Question 8

When fixed costs are high relative to variable costs, producers will tend to

Accepted Answer

A)  continue producing in the short run even if they incur some losses.
B)  quickly shut down in the short run whenever they see losses.
C)  only produce in the short run as long as the product price is lower than their average variable costs.
D)  produce in the short run even if the product price is lower than their average fixed costs.E) All of the above
F) None of the above

Question 9

Since 2002, agricultural policy in the United States has

Accepted Answer

A)  strengthened the free-market intent of the Freedom to Farm Act of 1996.
B)  retreated from the free-market intent of the Freedom to Farm Act of 1996.
C)  drastically reduced farm subsidies, in accordance with the WTO's Doha Round negotiations.
D)  opened up the farm-product markets in the U.S. to free trade.E) None of the above
F) All of the above

Question 10

To get the U.S. Senate to pass a farm bill, a U.S. senator from a farm state asks for the support of a U.S. senator from an urban state. The urban-state senator agrees to support the bill, if in return the farm-state senator supports a bill for a mass transit project. This situation is an example of

Accepted Answer

A)  the paradox of voting.
B)  rent-seeking behavior.
C)  political logrolling.
D)  the median voter model.E) None of the above
F) All of the above

Question 11

If farm state legislators support the food-stamp program to aid the urban poor and urban state legislators in turn support farm subsidies, this is an example of

Accepted Answer

A)  the special-interest effect.
B)  political logrolling.
C)  the paradox of voting.
D)  cost-benefit analysis.E) B) and C)
F) All of the above

Question 12

The Food, Conservation, and Energy Act of 2008 provided three types of agricultural subsidies: direct payments, countercyclical payments, and marketing loans.

Accepted Answer

A) True 
 B)False

Question 13

From 2010 to 2012, Johnny Deer exclusively grew corn. Under the Food, Conservation, and Energy Act of 2008, Deer

Accepted Answer

A)  was required to grow corn in the next year in order to receive direct payments from the federal government.
B)  was allowed to grow whatever crop he wanted in the next year, but would only receive direct payments from the federal government if the price of corn fell below a targeted price.
C)  was eligible to receive countercyclical payments if the price of corn fell below a targeted price, even though he did not grow corn in the next year.
D)  had to grow something other than corn the next year to qualify for direct payments from the federal government.E) All of the above
F) B) and C)

Question 14

An international agreement reached in 1994, by the world's trading nations provides for

Accepted Answer

A)  an increase in export subsidies on agricultural products.
B)  an increase in agricultural price supports.
C)  a reduction of tariffs on agricultural products.
D)  an international research organization designed to discover nonfood uses of agricultural output.E) B) and D)
F) None of the above

Question 15

Environmentalists generally support price supports because these subsidies motivate additional farm production.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following best describes the short-run problem faced by farms?

Accepted Answer

A)  New technology has increased the productivity of farmers and therefore resulted in declining farm prices and low farm incomes.
B)  The highly inelastic nature of agricultural demand, together with fluctuations in exports of farm goods, has caused small year-to-year fluctuations in farm output to result in highly unstable farm incomes.
C)  The supply of farm products has increased relative to the demand for them, and because demand is inelastic, prices of farm output and farm income have therefore declined.
D)  The demand for farm products has increased relative to their supply, but the elastic nature of agricultural demand has caused these shifts to result in declining farm incomes.E) None of the above
F) A) and C)

Question 17

The concept of parity in farm policy implies that

Accepted Answer

A)  farm incomes should remain stable over the business cycle.
B)  a given output should always provide the farmer with the same real income.
C)  the purchasing power of the farmer's dollar should rise each year.
D)  the prices of farm commodities should remain stable.E) None of the above
F) A) and B)

Question 18

The Freedom to Farm Act of 1996 aimed to eliminate agricultural price supports and acreage allotments for many crops.

Accepted Answer

A) True 
 B)False

Question 19

The parity concept of agricultural policy suggests that farmers should obtain a constant ratio of the prices they receive for their farm products and the prices they pay for goods and services in general.

Accepted Answer

A) True 
 B)False

Question 20

In part as a result of the U.S. government's ethanol program, between 2005 and 2012 the inflation-adjusted price of a bushel of corn

Accepted Answer

A)  tripled.
B)  rose 200 percent.
C)  fell 20 percent.
D)  collapsed to only 5 percent of its pre-2005 level.E) A) and B)
F) A) and C)

Exam 22: Agriculture: Economics and Policy

Farm employment in the United States amounted to about what percentage of the total employment in 2017?

Correct AnswerverifiedShow Answer

With a fixed level of farm production, a given shift in demand for a crop will cause a

Correct AnswerverifiedShow Answer

Farmers typically sell their products in highly competitive markets and buy in imperfectly competitive markets.

Correct AnswerverifiedShow Answer

An international agreement reached in 1994, by the world's trading nations provides for

Correct AnswerverifiedShow Answer

Refer to the table. If government adopts a price support program that sets the price at $7, then the total amount that government will pay to farmers of this product is

Correct AnswerverifiedShow Answer

From 2010 to 2012, Johnny Deer exclusively grew corn. Under the Food, Conservation, and Energy Act of 2008, Deer

Correct AnswerverifiedShow Answer

If farm state legislators support the food-stamp program to aid the urban poor and urban state legislators in turn support farm subsidies, this is an example of

Correct AnswerverifiedShow Answer

Environmentalists generally support price supports because these subsidies motivate additional farm production.

Correct AnswerverifiedShow Answer

When fixed costs are high relative to variable costs, producers will tend to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the prices received by farmers increased and the prices paid by farmers also increased, the parity ratio

Correct AnswerverifiedShow Answer

In part as a result of the U.S. government's ethanol program, between 2005 and 2012 the inflation-adjusted price of a bushel of corn

Correct AnswerverifiedShow Answer

The percentage of total employment in the U.S. that is accounted for by farms has been declining in the last six decades or so, but the absolute number of farm employment has actually risen slightly over those decades.

Correct AnswerverifiedShow Answer

A bumper crop of farm products causes

Correct AnswerverifiedShow Answer

Since 2002, agricultural policy in the United States has

Correct AnswerverifiedShow Answer

The Food, Conservation, and Energy Act of 2008 provided three types of agricultural subsidies: direct payments, countercyclical payments, and marketing loans.

Correct AnswerverifiedShow Answer

The parity concept of agricultural policy suggests that farmers should obtain a constant ratio of the prices they receive for their farm products and the prices they pay for goods and services in general.

Correct AnswerverifiedShow Answer

The concept of parity in farm policy implies that

Correct AnswerverifiedShow Answer

Which of the following best describes the short-run problem faced by farms?

Correct AnswerverifiedShow Answer

The Freedom to Farm Act of 1996 aimed to eliminate agricultural price supports and acreage allotments for many crops.

Correct AnswerverifiedShow Answer

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