Question 1

Because farm products have a low elasticity of demand, a small change in output will have

Accepted Answer

A)   An indeterminate effect on price.
B)   No effect on price.
C)   A smaller effect on price.
D)   A larger effect on price.E) All of the above
F) A) and B)

Question 2

The intent of the 1996 Freedom to Farm Act was to accomplish all of the following except

Accepted Answer

A)   Make farmers more dependent on market forces.
B)   Increase interest rates charged to farmers.
C)   Reduce prices to consumers.
D)   Improve allocative efficiency.E) A) and B)
F) A) and C)

Question 3

Which of the following characterizes a competitive agricultural market?

Accepted Answer

A)   The firm has a downward-sloping demand curve.
B)   The market has a horizontal demand curve.
C)   Price is determined by market demand and market supply.
D)   Economic profit is earned in the long run.E) A) and B)
F) A) and D)

Question 4

If an individual farmer in a perfectly competitive agricultural market raises her price above the market price, the farmer will

Accepted Answer

A)   Not sell any product.
B)   Earn greater total revenue.
C)   See other farmers follow the price rise.
D)   Earn greater total profit.E) None of the above
F) A) and D)

Question 5

Agricultural prices

Accepted Answer

A)   Are being influenced less by international markets than they were 20 years ago.
B)   Are lower because government support programs exist.
C)   Have fallen relative to nonagricultural prices in the long run.
D)   Are very stable since the government supports most agricultural prices.E) A) and D)
F) A) and B)

Question 6

Which of the following helped to maintain a healthy farm sector prior to 1920?

Accepted Answer

A)   A decreasing population.
B)   More advanced technology.
C)   Recurrent wars.
D)   Food for peace programs.E) A) and C)
F) A) and B)

Question 7

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The dollar increases in value in the foreign exchange markets.(See Figure 29.4.)

Accepted Answer

A)   a.
B)   b.
C)   c.
D)   d.E) A) and B)
F) A) and C)

Question 8

Ceteris paribus, if the corn crop is 15 percent larger this year than it was last year, farmers will have to ________ the price of corn by ________ to sell the new crop.

Accepted Answer

A)   raise; more than 15 percent
B)   reduce; more than 15 percent
C)   reduce; less than 15 percent
D)   reduce; exactly 15 percentE) B) and C)
F) B) and D)

Question 9

1 and a Commodity Credit Corporation (CCC)  loan rate set above P1.If the CCC loan rate is increased, the A)  Surplus in the market will become larger. B)  Surplus in the market will become smaller. C)  Shortage in the market will become larger. D)  Shortage in the market will become smaller." class="answers-bank-image d-inline" rel="preload" > Refer to Figure 29.3 for a cotton market with an equilibrium price of P1 and a Commodity Credit Corporation (CCC)  loan rate set above P1.If the CCC loan rate is increased, the

Accepted Answer

A)   Surplus in the market will become larger.
B)   Surplus in the market will become smaller.
C)   Shortage in the market will become larger.
D)   Shortage in the market will become smaller.E) A) and D)
F) A) and B)

Question 10

The 1996 Freedom to Farm Act

Accepted Answer

A)   Abolished the subsidy programs for all farm products.
B)   Increased the amount of acreage set-asides.
C)   Reregulated the farming industry.
D)   Further deregulated the farming industry.E) A) and B)
F) B) and C)

Question 11

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The European Union tightens restrictions on the agricultural products that can be imported from the United States.(See Figure 29.4.)

Accepted Answer

A)   a.
B)   b.
C)   c.
D)   d.E) A) and D)
F) B) and D)

Question 12

In the late 1990s, the Asian crisis reduced the demand for U.S.farm products, which weakened farm prices.

Accepted Answer

A) True 
 B)False

Question 13

Whenever the market price for crops is below the Commodity Credit Corporation (CCC) loan rate, the government will end up buying surplus crops.

Accepted Answer

A) True 
 B)False

Question 14

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: Transport costs for farm products increase.(See Figure 29.4.)

Accepted Answer

A)   a.
B)   b.
C)   c.
D)   d.E) B) and C)
F) A) and D)

Question 15

Which of the following would result from a price support program when the support price is set above the equilibrium price, ceteris paribus?

Accepted Answer

A)   Output would decline.
B)   The price paid by consumers would rise.
C)   The consumption of the product would rise.
D)   Quality would deteriorate.E) A) and D)
F) A) and C)

Question 16

Which of the following agricultural programs reduces agricultural output rather than increasing it?

Accepted Answer

A)   Direct income support programs.
B)   Marketing orders.
C)   Farm cost subsidies.
D)   Export sales.E) A) and B)
F) A) and C)

Question 17

Farm price support programs most often take the form of price

Accepted Answer

A)   Ceilings, which cause shortages.
B)   Floors, which cause shortages.
C)   Ceilings, which cause surpluses.
D)   Floors, which cause surpluses.E) A) and C)
F) A) and B)

Question 18

Individual farmers maximize profit by producing the level of output at which

Accepted Answer

A)   Marginal cost equals average cost.
B)   Marginal cost equals zero.
C)   Marginal cost equals price.
D)   Average cost equals zero.E) None of the above
F) All of the above

Question 19

Supply restrictions in the farming industry occur in the form of

Accepted Answer

A)   Import quotas.
B)   Government stockpiles.
C)   Price supports.
D)   Production subsidies.E) A) and B)
F) B) and C)

Question 20

Today, as a result of government policies, about 25 percent of all farm output is either destroyed or stored.

Accepted Answer

A) True 
 B)False

Exam 15: The Farm Problem

Supply restrictions in the farming industry occur in the form of

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Farm price support programs most often take the form of price

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Which of the following would result from a price support program when the support price is set above the equilibrium price, ceteris paribus?

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Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The European Union tightens restrictions on the agricultural products that can be imported from the United States.(See Figure 29.4.)

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Which of the following agricultural programs reduces agricultural output rather than increasing it?

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Ceteris paribus, if the corn crop is 15 percent larger this year than it was last year, farmers will have to ________ the price of corn by ________ to sell the new crop.

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In the late 1990s, the Asian crisis reduced the demand for U.S.farm products, which weakened farm prices.

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Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The dollar increases in value in the foreign exchange markets.(See Figure 29.4.)

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Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: Transport costs for farm products increase.(See Figure 29.4.)

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Which of the following characterizes a competitive agricultural market?

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The 1996 Freedom to Farm Act

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Agricultural prices

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Individual farmers maximize profit by producing the level of output at which

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The intent of the 1996 Freedom to Farm Act was to accomplish all of the following except

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Whenever the market price for crops is below the Commodity Credit Corporation (CCC) loan rate, the government will end up buying surplus crops.

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If an individual farmer in a perfectly competitive agricultural market raises her price above the market price, the farmer will

Correct AnswerverifiedShow Answer

Because farm products have a low elasticity of demand, a small change in output will have

Correct AnswerverifiedShow Answer

Today, as a result of government policies, about 25 percent of all farm output is either destroyed or stored.

Correct AnswerverifiedShow Answer

Which of the following helped to maintain a healthy farm sector prior to 1920?

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Refer to Figure 29.3 for a cotton market with an equilibrium price of P1 and a Commodity Credit Corporation (CCC) loan rate set above P1.If the CCC loan rate is increased, the

Correct AnswerverifiedShow Answer

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Ceteris paribus, if the corn crop is 15 percent larger this year than it was last year, farmers will have to the price of corn by to sell the new crop.

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Refer to Figure 29.3 for a cotton market with an equilibrium price of P₁ and a Commodity Credit Corporation (CCC) loan rate set above P₁.If the CCC loan rate is increased, the

Correct Answer
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