Question 1

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

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Public policy has been ineffective in alleviating the resource misallocation problem in American agriculture.

Accepted Answer

A) True 
 B)False  True

Question 4

Farm employment in the United States amounted to about what percentage of the total employment in 2015?

Accepted Answer

A)   less than 2 percent
B)   about 8 percent
C)   about 15 percent
D)   close to 20 percentE) None of the above
F) A) and B)

Question 5

The growing importance of export demand for American agriculture has

Accepted Answer

A)   reduced the international value of the dollar.
B)   had no significant effect on the stability of the demand for farm products.
C)   destabilized the total demand for farm products.
D)   stabilized the total demand for farm products.E) B) and D)
F) A) and D)

Question 6

The Food, Conservation, and Energy Act of 2008 provided three main forms of cash commodity subsidies, including the following, except

Accepted Answer

A)   direct payments.
B)   cash rebates.
C)   countercyclical payments.
D)   marketing loans.E) B) and D)
F) None of the above

Question 7

The inelastic demand for agricultural products means that

Accepted Answer

A)   large changes in agricultural production result in no change in farm prices and incomes.
B)   small changes in agricultural production result in no change in farm prices and incomes.
C)   large changes in agricultural production result in relatively smaller changes in farm prices and incomes.
D)   small changes in agricultural production result in relatively larger changes in farm prices and incomes.E) C) and D)
F) None of the above

Question 8

Between 2002 and 2011, U.S. farmers received yearly direct subsidies from the federal government averaging about

Accepted Answer

A)   $2 billion.
B)   $10 billion.
C)   $20 billion.
D)   $40 billion.E) B) and D)
F) B) and C)

Question 9

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

Question 10

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 11

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

Accepted Answer

A) True 
 B)False  False

Question 12

The food-stamp program is designed to

Accepted Answer

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

Question 13

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

Question 14

The inelastic demand for agricultural products means that relatively a small increase in supply will result in a relatively

Accepted Answer

A)   large decrease in farm prices and total revenue for farmers.
B)   small increase in farm prices and total revenue for farmers.
C)   small decrease in farm prices and a relatively large increase in total revenue for farmers.
D)   large increase in farm prices and a relatively small decrease in total revenue for farmers.E) None of the above
F) A) and C) A

Question 15

(Consider This)  Which of the following has been an effect of the U.S. government's ethanol program?

Accepted Answer

A)   Prices for crops such as soybeans and sorghum have fallen dramatically.
B)   Prices for beef, pork, and chicken have risen.
C)   Water use has declined, as corn is a less water-intensive crop.
D)   All of these effects have resulted from the ethanol program.E) All of the above
F) A) and D)

Question 16

In a purely competitive market, how would a surplus of a product be eliminated?

Accepted Answer

A)   The price of the product would decrease.
B)   The price of the product would increase.
C)   The quantity supplied of the product would increase.
D)   The quantity demanded for the product would decrease.E) C) and D)
F) A) and D)

Question 17

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 proportionately to increases in income.
C)   Resources in agriculture are relatively immobile.
D)   Demand is inelastic with respect to price.E) A) and D)
F) A) and C)

Question 18

The Freedom to Farm Act of 1996 was designed to encourage farmers to

Accepted Answer

A)   seek more subsidies from government.
B)   plant more corn and less soybeans.
C)   plant more wheat and less corn.
D)   respond to market prices.E) A) and D)
F) A) and B)

Question 19

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 20

The increasing relative importance of agricultural exports has increased the instability of the demand for U.S. farm products.

Accepted Answer

A) True 
 B)False

Exam 22: Agriculture: Economics and Policy

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Public policy has been ineffective in alleviating the resource misallocation problem in American agriculture.

Correct AnswerverifiedTrue

Farm employment in the United States amounted to about what percentage of the total employment in 2015?

Correct AnswerverifiedShow Answer

The growing importance of export demand for American agriculture has

Correct AnswerverifiedShow Answer

The Food, Conservation, and Energy Act of 2008 provided three main forms of cash commodity subsidies, including the following, except

Correct AnswerverifiedShow Answer

The inelastic demand for agricultural products means that

Correct AnswerverifiedShow Answer

Between 2002 and 2011, U.S. farmers received yearly direct subsidies from the federal government averaging about

Correct AnswerverifiedShow 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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedFalse

The food-stamp program is designed to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The inelastic demand for agricultural products means that relatively a small increase in supply will result in a relatively

Correct AnswerverifiedA

(Consider This) Which of the following has been an effect of the U.S. government's ethanol program?

Correct AnswerverifiedShow Answer

In a purely competitive market, how would a surplus of a product be eliminated?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Freedom to Farm Act of 1996 was designed to encourage farmers to

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

The increasing relative importance of agricultural exports has increased the instability of the demand for U.S. farm products.

Correct AnswerverifiedShow Answer

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