Question 1

Agricultural risk coverage guarantees payments to farmers when the price of their crop falls below a specific value.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements best describes the demand for agricultural commodities?

Accepted Answer

A)  It takes a small decline in price to induce a large increase in the amount of agricultural products demanded.
B)  The marginal utility of additional units of agricultural output diminishes very rapidly.
C)  Small increases in income cause demand to increase by a proportionately larger amount.
D)  When price declines, the resulting substitution effect is very large.E) B) and D)
F) All of the above

Question 3

Discuss the two new types of crop insurance programs which were introduced in the Agricultural Act of 2014.

Accepted Answer

With price loss coverage, farmers who pa...

Question 4

The use of price-support programs in agriculture has hastened the exodus of resources from agriculture.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the graph of the market for wheat. The government adopts a price support program for wheat and supports the wheat price at P ₂. The triangular area defined by points B and C and the intersection of the supply and demand curve represents the

Accepted Answer

A)  parity ratio.
B)  taxpayers' burden.
C)  efficiency gain.
D)  efficiency loss.E) B) and C)
F) C) and D)

Question 6

Recent government policies to provide price and income subsidies in agriculture are economically inefficient because they

Accepted Answer

A)  increase the interest costs for farmers.
B)  maintain high production levels for farm products.
C)  limit the adoption of new technology to increase output.
D)  give control over production and prices to a few, large agribusinesses.E) B) and C)
F) None of the above

Question 7

It is estimated that the price elasticity coefficient for farm products is 0.2. Therefore, in order for consumers to increase their purchases of farm products by 10 percent, the prices of these products would have to fall

Accepted Answer

A)  20 percent.
B)  40 percent.
C)  50 percent.
D)  80 percent.E) B) and C)
F) A) and D)

Question 8

If the demand for an agricultural product is inelastic, a bumper crop will

Accepted Answer

A)  raise price and decrease total revenues.
B)  raise price and increase total revenues.
C)  lower price and decrease total revenues.
D)  lower price and increase total revenues.E) C) and D)
F) A) and D)

Question 9

What has been the rationale made over the years to justify government subsidies for agriculture?

Accepted Answer

Justification of government subsidies ov...

Question 10

Discuss the criticism of the parity concept.

Accepted Answer

Economists have rejected the parity conc...

Question 11

Between 2010 and 2018, U.S. farmers received yearly direct subsidies from the federal government averaging about

Accepted Answer

A)  $12 billion.
B)  $20 billion.
C)  $16 billion.
D)  $40 billion.E) B) and D)
F) A) and B)

Question 12

What are the major economic effects on output, prices, and farmers' income from government price supports that set minimum prices for farm products?

Accepted Answer

The use of price floors or price support...

Question 13

Technological advances have occurred throughout the history of agriculture, resulting in higher productivity but lower incomes to farmers.

Accepted Answer

A) True 
 B)False

Question 14

The government's promotion of greater production and use of corn-based ethanol was intended to

Accepted Answer

A)  reduce the price of ethanol-blended gasoline.
B)  bolster the demand for corn.
C)  reduce the surplus supply of corn.
D)  increase the importation of ethanol.E) A) and B)
F) A) and C)

Question 15

Through the Freedom to Farm Act of 1996, farmers were

Accepted Answer

A)  guaranteed declining annual "transition payments" through 2002.
B)  given higher price supports for a larger number of agricultural products.
C)  protected by tariffs on imported agricultural products after 2002.
D)  allowed to consolidate smaller farms with larger farms to make farming more efficient.E) None of the above
F) A) and B)

Question 16

What is the reason why large, short-run declines in farm prices do not significantly reduce farm production in the short run?

Accepted Answer

A)  Farmers' variable costs are high compared with their fixed costs.
B)  Farmers' fixed costs are high compared with their variable costs.
C)  Farmers' prices received are greater than prices paid for agricultural products.
D)  Farmers' prices paid are greater than prices received for agricultural products.E) A) and B)
F) A) and C)

Question 17

The demand for agricultural products rises less rapidly than income. This means that the demand for agricultural products is

Accepted Answer

A)  income inelastic.
B)  income elastic.
C)  price inelastic.
D)  price elastic.E) B) and C)
F) All of the above

Question 18

Because government price supports cause surplus production, government policies have been designed to

Accepted Answer

A)  increase demand and decrease supply of farm products.
B)  decrease demand and increase supply of farm products.
C)  increase demand and increase supply of farm products.
D)  decrease demand and decrease supply of farm products.E) A) and D)
F) A) and C)

Question 19

A significant reason that increases in demand for agricultural products have been relatively small is because increases in the

Accepted Answer

A)  population of the United States have been greater than increases in the productivity of agriculture.
B)  population of the United States have been greater than decreases in the productivity of agriculture.
C)  incomes of U.S. consumers result in more than proportionate increases in their spending on agricultural products.
D)  incomes of U.S. consumers result in less than proportionate increases in their spending on agricultural products.E) A) and D)
F) B) and D)

Question 20

Which statement best characterizes the long-run decline in the agricultural industry?

Accepted Answer

A)  The growth in the demand for farm products has exceeded the growth in the supply of such products, causing rising farm product prices and falling farm income.
B)  The growth in the supply of farm products has exceeded the growth in the demand for such products, causing falling farm product prices and falling farm income.
C)  The supply of farm products has increased while the demand for such products has decreased, causing falling farm product prices and falling farm income.
D)  The demand for farm products has increased while the supply of such products has decreased, causing rising farm product prices and rising farm income.E) A) and B)
F) B) and C)

Exam 22: Agriculture: Economics and Policy

Technological advances have occurred throughout the history of agriculture, resulting in higher productivity but lower incomes to farmers.

Correct AnswerverifiedShow Answer

Recent government policies to provide price and income subsidies in agriculture are economically inefficient because they

Correct AnswerverifiedShow Answer

Between 2010 and 2018, U.S. farmers received yearly direct subsidies from the federal government averaging about

Correct AnswerverifiedShow Answer

A significant reason that increases in demand for agricultural products have been relatively small is because increases in the

Correct AnswerverifiedShow Answer

Agricultural risk coverage guarantees payments to farmers when the price of their crop falls below a specific value.

Correct AnswerverifiedShow Answer

Refer to the graph of the market for wheat. The government adopts a price support program for wheat and supports the wheat price at P ₂. The triangular area defined by points B and C and the intersection of the supply and demand curve represents the

Correct AnswerverifiedShow Answer

Discuss the two new types of crop insurance programs which were introduced in the Agricultural Act of 2014.

Correct AnswerverifiedWith price loss coverage, farmers who pa...View AnswerShow Answer

If the demand for an agricultural product is inelastic, a bumper crop will

Correct AnswerverifiedShow Answer

What are the major economic effects on output, prices, and farmers' income from government price supports that set minimum prices for farm products?

Correct AnswerverifiedThe use of price floors or price support...View AnswerShow Answer

Through the Freedom to Farm Act of 1996, farmers were

Correct AnswerverifiedShow Answer

Which statement best characterizes the long-run decline in the agricultural industry?

Correct AnswerverifiedShow Answer

Which of the following statements best describes the demand for agricultural commodities?

Correct AnswerverifiedShow Answer

The demand for agricultural products rises less rapidly than income. This means that the demand for agricultural products is

Correct AnswerverifiedShow Answer

Discuss the criticism of the parity concept.

Correct AnswerverifiedEconomists have rejected the parity conc...View AnswerShow Answer

What is the reason why large, short-run declines in farm prices do not significantly reduce farm production in the short run?

Correct AnswerverifiedShow Answer

What has been the rationale made over the years to justify government subsidies for agriculture?

Correct AnswerverifiedJustification of government subsidies ov...View AnswerShow Answer

It is estimated that the price elasticity coefficient for farm products is 0.2. Therefore, in order for consumers to increase their purchases of farm products by 10 percent, the prices of these products would have to fall

Correct AnswerverifiedShow Answer

Because government price supports cause surplus production, government policies have been designed to

Correct AnswerverifiedShow Answer

The use of price-support programs in agriculture has hastened the exodus of resources from agriculture.

Correct AnswerverifiedShow Answer

The government's promotion of greater production and use of corn-based ethanol was intended to

Correct AnswerverifiedShow Answer

Correct Answer
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With price loss coverage, farmers who pa...
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Correct Answer
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Correct Answer
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The use of price floors or price support...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Economists have rejected the parity conc...
View Answer

Correct Answer
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Correct Answer
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Justification of government subsidies ov...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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