Question 1

U.S.exports of farm products have generally declined as a percentage of U.S.farm output over the past half-century.

Accepted Answer

A) True 
 B)False

Question 2

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 B)
F) C) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would,other things equal,increase the demand for U.S.farm products?

Accepted Answer

A)   Poorer crops abroad.
B)   Appreciation of the U.S.dollar.
C)   Deteriorating trade relations with China and Russia.
D)   Increases in foreign tariffs on imported farm products.E) None of the above
F) All of the above

Question 5

The federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

The principal beneficiaries of government agricultural aid have been the very low-income farmers.

Accepted Answer

A) True 
 B)False

Question 9

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because:

Accepted Answer

A)   they distort domestic and world agricultural prices.
B)   they inhibit technological progress in agriculture.
C)   production and trade occur on the basis of comparative advantage.
D)   price supports are set below market-clearing levels.E) All of the above
F) A) and B)

Question 10

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) A) and D)
F) C) and D)

Question 11

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 C)
F) All of the above

Question 12

If the demand for agricultural products is inelastic,a relatively small increase in supply will cause farm prices and incomes to decline.

Accepted Answer

A) True 
 B)False

Question 13

(Consider This) 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)

Question 14

(Last Word) The U.S.sugar program:

Accepted Answer

A)   decreases the domestic price of sugar.
B)   requires import quotas or tariffs on foreign sugar.
C)   increases the export earnings of other sugar-producing countries.
D)   aids developing countries that produce sugar.E) A) and B)
F) A) and C)

Question 15

Which of the following best describes the main problem faced by farms in the long run?

Accepted Answer

A)   Lagging technology has decreased the productivity of farmers and therefore resulted in low farm prices and incomes.
B)   The highly inelastic nature of agricultural demand 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,farm prices and incomes have therefore declined.
D)   The demand for farm products has increased relative to their supply,but the highly elastic nature of agricultural demand has caused these shifts to result in declining farm incomes.E) All of the above
F) B) and C)

Question 16

(Last Word) The U.S.sugar program has:

Accepted Answer

A)   improved the world allocation of agricultural resources.
B)   caused the world price of sugar to rise above its domestic price.
C)   increased domestic sugar production.
D)   lowered the incomes of U.S.sugar growers.E) A) and D)
F) A) and C)

Question 17

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

Question 18

The parity ratio:

Accepted Answer

A)   compares worker productivity in the farm and nonfarm sectors.
B)   is the ratio of per capita farm income to per capita nonfarm income.
C)   is the ratio of prices received by farmers to prices paid by farmers.
D)   is the ratio of prices paid by farmers to prices received by farmers.E) B) and C)
F) C) and D)

Question 19

Which of the following is not characteristic of U.S.agriculture?

Accepted Answer

A)   Productivity has been increasing more slowly in agriculture than in the rest of the economy.
B)   The demand for agricultural commodities increases less than proportionate to increases in income.
C)   Resources in agriculture are relatively immobile.
D)   Demand is inelastic with respect to price.E) A) and C)
F) A) and B)

Question 20

In 1994,the world's trading nations agreed to:

Accepted Answer

A)   increase export subsidies to reduce world surpluses of farm products.
B)   reduce agricultural subsidies and tariffs on agricultural imports.
C)   eliminate all price supports for farm products.
D)   create an international farm price support system to replace the price support systems of individual countries.E) B) and C)
F) A) and B)

Exam 21: Agriculture: Economics and Policy

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

Correct AnswerverifiedShow Answer

(Consider This) 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

(Last Word) The U.S.sugar program has:

Correct AnswerverifiedShow Answer

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following best describes the main problem faced by farms in the long run?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The principal beneficiaries of government agricultural aid have been the very low-income farmers.

Correct AnswerverifiedShow Answer

If the demand for agricultural products is inelastic,a relatively small increase in supply will cause farm prices and incomes to decline.

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

In 1994,the world's trading nations agreed to:

Correct AnswerverifiedShow Answer

The parity ratio:

Correct AnswerverifiedShow Answer

Which of the following is not characteristic of U.S.agriculture?

Correct AnswerverifiedShow Answer

U.S.exports of farm products have generally declined as a percentage of U.S.farm output over the past half-century.

Correct AnswerverifiedShow Answer

An extraordinarily small crop of farm products due to drought causes:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would,other things equal,increase the demand for U.S.farm products?

Correct AnswerverifiedShow Answer

The federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996.

Correct AnswerverifiedShow Answer

(Last Word) The U.S.sugar program:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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