Question 1

If government establishes a system of price supports, it is in effect setting a

Accepted Answer

A)  price ceiling.
B)  price floor.
C)  maximum level of output.
D)  minimum level of output.E) A) and C)
F) B) and C)

Question 2

The 2014 Agriculture Act in the U.S.eliminated farm subsidies so as to encourage farmers to move their resources to nonfarming production activities.

Accepted Answer

A) True 
 B)False

Question 3

Approximately what percentage of American consumers' total spending is on food?

Accepted Answer

A)  about 10 percent
B)  20-25 percent
C)  about 30 percent
D)  more than 40 percentE) B) and C)
F) C) and D)

Question 4

Suppose the demand for good X, an agricultural product, is price-inelastic.This means that small variations in the quantity of X produced will be associated with large variations in the

Accepted Answer

A)  price of good X.
B)  incomes of consumers of good X.
C)  cost of producing good X.
D)  quantity of good X exchanged.E) B) and C)
F) None of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Agricultural price-support programs result in consumers paying lower prices for the product.

Accepted Answer

A) True 
 B)False

Question 7

The price elasticity of demand for most agricultural products is relatively low.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

Which of the following was a feature of farm policy present in the Food, Conservation, and Energy Act of 2008 that was not part of the Freedom to Farm Act of 1996?

Accepted Answer

A)  direct payments (direct subsidies)  based on crops currently grown
B)  countercyclical payments
C)  farm buyouts by government
D)  acreage allotments (restrictions on planting) E) B) and C)
F) All of the above

Question 10

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

Question 11

The demand for agricultural products is quite inelastic, and this can be explained by

Accepted Answer

A)  economies of scale and the substitution effect.
B)  diminishing marginal returns and the income effect.
C)  increasing marginal cost and the income effect.
D)  the substitution effect and diminishing marginal utility.E) B) and D)
F) A) and C)

Question 12

Which of the following is not a reason to predict that farm subsidies might decline in the future?

Accepted Answer

A)  a declining farm population
B)  the special interest effect
C)  pressure to cut the budget deficit
D)  conflicts with free world tradeE) A) and B)
F) B) and C)

Question 13

The Agricultural Act of 2014 expanded the direct payments, countercyclical payments, and marketing loans provided by the Food, Conservation, and Energy Act of 2008.

Accepted Answer

A) True 
 B)False

Question 14

The Food for Peace program is designed to

Accepted Answer

A)  achieve 100 percent price parity for all farm products.
B)  discover new uses for farm products through research and development.
C)  take agricultural land out of the production of feed grains.
D)  facilitate the distribution of surplus U.S.farm products in the developing countries.E) A) and B)
F) A) and C)

Question 15

Which of the following countries has the smallest percentage of its labor force employed in agriculture?

Accepted Answer

A)  Madagascar
B)  France
C)  Brazil
D)  United StatesE) C) and D)
F) A) and C)

Question 16

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

Question 17

The three types of farm subsidies under the Food, Conservation, and Energy Act of 2008 are

Accepted Answer

A)  equipment coupons, land leases, and income contributions.
B)  marketing agreements, transition payments, and interest loans.
C)  direct payments, countercyclical payments, and marketing loans.
D)  public land sales, fertilizer discounts, and farm bank loans.E) A) and B)
F) A) and C)

Question 18

The Agricultural Act of 2014 does not address the fundamental problem of agricultural subsidies, which is that those subsidies

Accepted Answer

A)  reduce work incentive for farmers, thus reducing agricultural production.
B)  slow the exodus of resources from agriculture, increase production of agricultural products, and reduce crop prices and market incomes.
C)  increase the exodus of resources from agriculture and reduce investments by farmers in land and equipment.
D)  are based on past agricultural production and not on current agricultural production.E) None of the above
F) B) and C)

Question 19

Farm policy in the U.S.has been heavily criticized for the following, except

Accepted Answer

A)  being fraught with policy contradictions.
B)  directing most subsidies to the wealthier farmers.
C)  benefiting foreign farmers, rather than domestic farmers.
D)  delaying the shift of resources away from agriculture.E) None of the above
F) A) and B)

Question 20

The increase in the productivity of U.S.farmers has caused

Accepted Answer

A)  more people to be attracted to farming.
B)  a decrease in the size of the average farm.
C)  a reduction in the number of people in farming.
D)  a reduction in the surpluses produced by farmers.E) A) and B)
F) A) and C)

Exam 22: Agriculture: Economics and Policy

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

Correct AnswerverifiedShow Answer

The Agricultural Act of 2014 expanded the direct payments, countercyclical payments, and marketing loans provided by the Food, Conservation, and Energy Act of 2008.

Correct AnswerverifiedShow Answer

The 2014 Agriculture Act in the U.S.eliminated farm subsidies so as to encourage farmers to move their resources to nonfarming production activities.

Correct AnswerverifiedShow Answer

Which of the following is not a reason to predict that farm subsidies might decline in the future?

Correct AnswerverifiedShow Answer

If government establishes a system of price supports, it is in effect setting a

Correct AnswerverifiedShow Answer

Agricultural price-support programs result in consumers paying lower prices for the product.

Correct AnswerverifiedShow Answer

The three types of farm subsidies under the Food, Conservation, and Energy Act of 2008 are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following was a feature of farm policy present in the Food, Conservation, and Energy Act of 2008 that was not part of the Freedom to Farm Act of 1996?

Correct AnswerverifiedShow Answer

Approximately what percentage of American consumers' total spending is on food?

Correct AnswerverifiedShow Answer

Farm policy in the U.S.has been heavily criticized for the following, except

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Food for Peace program is designed to

Correct AnswerverifiedShow Answer

The price elasticity of demand for most agricultural products is relatively low.

Correct AnswerverifiedShow Answer

Suppose the demand for good X, an agricultural product, is price-inelastic.This means that small variations in the quantity of X produced will be associated with large variations in the

Correct AnswerverifiedShow Answer

The Agricultural Act of 2014 does not address the fundamental problem of agricultural subsidies, which is that those subsidies

Correct AnswerverifiedShow Answer

The increase in the productivity of U.S.farmers has caused

Correct AnswerverifiedShow Answer

The parity ratio

Correct AnswerverifiedShow Answer

Which of the following countries has the smallest percentage of its labor force employed in agriculture?

Correct AnswerverifiedShow Answer

The demand for agricultural products is quite inelastic, and this can be explained by

Correct AnswerverifiedShow Answer

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