Question 1

In which of the following countries do farmers receive the largest percentage of their incomes as government subsidies?

Accepted Answer

A)   Switzerland
B)   Mexico
C)   Canada
D)   United StatesE) A) and B)
F) A) and C)

Question 2

When increases in the supply of an agricultural product are much greater than the increases in demand for it over time, then the price

Accepted Answer

A)   and quantity of agricultural products will increase.
B)   and quantity of agricultural products will decrease.
C)   of agricultural products will increase, but the quantity will decrease.
D)   of agricultural products will decrease, but the quantity will increase.E) A) and B)
F) C) and D)

Question 3

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

Question 4

Price support programs for agricultural products tend to cause shortages of these products.

Accepted Answer

A) True 
 B)False

Question 5

If turnips are an example of an inferior good, then a decrease in the demand for turnips could be brought about by a(n)

Accepted Answer

A)   increase in consumer incomes.
B)   decrease in consumer incomes.
C)   decrease in the price of turnips.
D)   decrease in the price of some other product.E) All of the above
F) B) and C)

Question 6

Due to high fixed costs relative to variable costs in farming, farm production is quite sensitive to price changes in the short run.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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) C) and D)
F) B) and D)

Question 9

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

Question 10

In 2015, Farmer Levi grew only soybeans and received payments under the agricultural risk coverage program of the Agricultural Act of 2014. Which of the following best explains why Farmer Levi received these payments?

Accepted Answer

A)   The price of soybeans fell below a specified threshold.
B)   The total revenue of all farmers in the county fell below a specified threshold.
C)   The total revenue by all soybean growers in the county fell below a specified threshold.
D)   The total revenue of all soybean farmers participating in the program fell below a specified threshold.E) A) and D)
F) All of the above

Question 11

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

Question 12

Ward Planter exclusively grew soybeans from 2011 to 2013 and participated in the marketing loan program of the Food, Conservation, and Energy Act of 2008. If the "crop price" of soybeans at harvest was less than the preharvest "loan price," Planter could

Accepted Answer

A)   sell his crop in the market and receive the difference between the crop price and loan price as a direct payment from the federal government.
B)   take a "crop credit" based on the difference between the crop price and the loan price and use the credit to reduce federal income taxes owed.
C)   receive an "emergency loan" that could be paid back over the following five years.
D)   forfeit the harvest to the lender and be free of the loan, thus receiving a subsidy because the proceeds from the loan exceeded the revenues from the sale of the crop in the market.E) None of the above
F) A) and B)

Question 13

A source of demand volatility for agricultural products is

Accepted Answer

A)   the strict application of "100 percent parity" by the Department of Agriculture.
B)   a sharp fluctuation in foreign demand for U.S. farm products.
C)   the large grain harvest which resulted from excellent weather.
D)   the increasing mechanization of farms.E) B) and C)
F) C) and D)

Question 14

Incomes of U.S. farmers are adversely affected by

Accepted Answer

A)   very good harvests on farms abroad.
B)   economic expansion abroad.
C)   less protectionist farm policies abroad.
D)   higher prices of farm products.E) None of the above
F) A) and D)

Question 15

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 16

The major factor contributing to lower prices for many farm products in 1998 and 1999 was

Accepted Answer

A)   a rise in the cost of farm equipment.
B)   a drop in the value of farmland prices.
C)   greater demand for food and higher interest costs.
D)   reduced export demand and strong crop production.E) B) and C)
F) A) and D)

Question 17

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 18

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 C)

Question 19

The misallocation of resources associated with price supports

Accepted Answer

A)   affects both domestic and foreign economies.
B)   affects only foreign economies.
C)   affects only the domestic economy.
D)   is fully offset by reductions in food prices.E) A) and D)
F) A) and C)

Question 20

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) A) and B)
F) A) and C)

Exam 22: Agriculture: Economics and Policy

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Incomes of U.S. farmers are adversely affected by

Correct AnswerverifiedShow Answer

In 2015, Farmer Levi grew only soybeans and received payments under the agricultural risk coverage program of the Agricultural Act of 2014. Which of the following best explains why Farmer Levi received these payments?

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

A bumper crop of farm products causes

Correct AnswerverifiedShow Answer

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

If turnips are an example of an inferior good, then a decrease in the demand for turnips could be brought about by a(n)

Correct AnswerverifiedShow Answer

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

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Which statement is correct?

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Price support programs for agricultural products tend to cause shortages of these products.

Correct AnswerverifiedShow Answer

In which of the following countries do farmers receive the largest percentage of their incomes as government subsidies?

Correct AnswerverifiedShow Answer

The misallocation of resources associated with price supports

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When increases in the supply of an agricultural product are much greater than the increases in demand for it over time, then the price

Correct AnswerverifiedShow Answer

The major factor contributing to lower prices for many farm products in 1998 and 1999 was

Correct AnswerverifiedShow Answer

Ward Planter exclusively grew soybeans from 2011 to 2013 and participated in the marketing loan program of the Food, Conservation, and Energy Act of 2008. If the "crop price" of soybeans at harvest was less than the preharvest "loan price," Planter could

Correct AnswerverifiedShow Answer

A source of demand volatility for agricultural products is

Correct AnswerverifiedShow Answer

Due to high fixed costs relative to variable costs in farming, farm production is quite sensitive to price changes in the short run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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