Question 1

When critics of U.S. farm policy say that it treats symptoms rather than causes, they mean that the

Accepted Answer

A)   policy attempts to bolster low farm income, while the real problem is an overallocation of resources to agriculture.
B)   policy deals with the overallocation of resources to agriculture, while the basic farm problem is low incomes.
C)   policy attempts to bolster low farm incomes, while the real problem is an underallocation of resources to agriculture.
D)   restriction of output in the short run may reduce productive capacity in agriculture in the long run.E) A) and B)
F) None of the above

Question 2

What percentage of their spending do U.S. consumers allocate to food purchases?

Accepted Answer

A)   1 percent.
B)   7 percent.
C)   10 percent.
D)   13 percent.E) A) and B)
F) A) and D)

Question 3

If the prices paid by farmers increase and the prices received by farmers decrease, then the parity ratio

Accepted Answer

A)   will necessarily decrease.
B)   will necessarily increase.
C)   may either increase or decrease.
D)   will be unaffected.E) All of the above
F) C) and D)

Question 4

An increase in the supply of farm products relative to the demand for them tends to cause farm incomes to decline.

Accepted Answer

A) True 
 B)False

Question 5

The Food, Conservation, and Energy Act of 2008 provided three types of agricultural subsidies: direct payments, countercyclical payments, and marketing loans.

Accepted Answer

A) True 
 B)False

Question 6

Because the demand for agricultural products is price-inelastic, price support programs tend to

Accepted Answer

A)   increase farm income.
B)   decrease farm income.
C)   have no effect upon farm income.
D)   cause farm incomes to fluctuate more than they would without such programs.E) A) and B)
F) B) and C)

Question 7

Which of the following arguments for farm subsidies is most closely associated with the parity concept?

Accepted Answer

A)   Although farmers produce necessities for the rest of us, they receive low incomes that are declining in real terms and should therefore receive price and income support.
B)   Farmers sell their output in purely competitive markets but must buy inputs from imperfectly competitive firms.
C)   Farmers cannot fully insure themselves against the risks unusual to farming, such as floods, droughts, and pests.
D)   The "family farm" is an American institution that should be protected and nurtured.E) A) and B)
F) A) and C)

Question 8

The Food, Conservation, and Energy Act of 2008 provided farm subsidies in the form of direct payments, countercyclical payments, and marketing loans to farmers.

Accepted Answer

A) True 
 B)False

Question 9

In 2015, farm employment constituted about

Accepted Answer

A)   15.8 percent of total employment.
B)   1.1 percent of total employment.
C)   1.5 percent of total employment.
D)   2.4 percent of total employment.E) A) and D)
F) B) and C)

Question 10

(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) B) and C)
F) None of the above

Question 11

Given the short-run instability of farm incomes, many farmers use some form of "hedging" to smooth out their incomes over time, including the following, except

Accepted Answer

A)   crop revenue insurance.
B)   futures markets.
C)   contracting with processors.
D)   forming a cartel to fix prices.E) B) and D)
F) None of the above

Question 12

(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) B) and C)
F) C) and D)

Question 13

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 B)

Question 14

The price elasticity of demand for food tends to be

Accepted Answer

A)   higher in richer nations.
B)   lower in richer nations.
C)   the same in rich and poor nations.
D)   unrelated to per capita wealth.E) All of the above
F) A) and D)

Question 15

Federal food distribution programs, such as the food stamp program, represent efforts to

Accepted Answer

A)   increase supplies of agricultural commodities.
B)   increase demand for agricultural commodities.
C)   decrease the value of farming to the nation.
D)   facilitate the movement of people from farms to cities.E) All of the above
F) B) and D)

Question 16

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

Accepted Answer

A)   direct payments.
B)   price supports.
C)   countercyclical payments.
D)   price gap set-asides.E) None of the above
F) B) and C)

Question 17

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

Question 18

Price supports

Accepted Answer

A)   decrease pollution because participants must practice organic farming.
B)   neither increase nor decrease environmental pollution.
C)   increase pollution because supports encourage the cultivation of marginal land and the use of more pesticides and fertilizers.
D)   discourage rent-seeking activity.E) All of the above
F) None of the above

Question 19

The price parity concept, which is a cornerstone of U.S. agricultural policy, was established by the

Accepted Answer

A)   Agricultural Income Act of 1914.
B)   Agricultural Adjustment Act of 1933.
C)   Obama administration.
D)   Reagan administration.E) A) and C)
F) None of the above

Question 20

As a nation's average household income rises, the percentage of household income that goes to food expenditures also increases.

Accepted Answer

A) True 
 B)False

Exam 22: Agriculture: Economics and Policy

The Food, Conservation, and Energy Act of 2008 provided farm subsidies in the form of direct payments, countercyclical payments, and marketing loans to farmers.

Correct AnswerverifiedShow Answer

Price supports

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The Food, Conservation, and Energy Act of 2008 provided three types of agricultural subsidies: direct payments, countercyclical payments, and marketing loans.

Correct AnswerverifiedShow Answer

If the prices paid by farmers increase and the prices received by farmers decrease, then the parity ratio

Correct AnswerverifiedShow Answer

When critics of U.S. farm policy say that it treats symptoms rather than causes, they mean that the

Correct AnswerverifiedShow Answer

Because the demand for agricultural products is price-inelastic, price support programs tend to

Correct AnswerverifiedShow Answer

Given the short-run instability of farm incomes, many farmers use some form of "hedging" to smooth out their incomes over time, including the following, except

Correct AnswerverifiedShow Answer

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

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

As a nation's average household income rises, the percentage of household income that goes to food expenditures also increases.

Correct AnswerverifiedShow Answer

In 2015, farm employment constituted about

Correct AnswerverifiedShow Answer

Which of the following arguments for farm subsidies is most closely associated with the parity concept?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What percentage of their spending do U.S. consumers allocate to food purchases?

Correct AnswerverifiedShow Answer

An increase in the supply of farm products relative to the demand for them tends to cause farm incomes to decline.

Correct AnswerverifiedShow Answer

The price elasticity of demand for food tends to be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The price parity concept, which is a cornerstone of U.S. agricultural policy, was established by the

Correct AnswerverifiedShow Answer

Federal food distribution programs, such as the food stamp program, represent efforts to

Correct AnswerverifiedShow Answer

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