Question 1

The price of a certain farm product was $1.25 in the base period when the parity ratio was 100. If the index of prices paid by farmers is now at 140, then the parity price of this farm product today should be

Accepted Answer

A)   $0.90.
B)   $1.50.
C)   $1.75.
D)   $2.00.E) C) and D)
F) B) and C)

Question 2

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

Question 3

A decrease in the quantity of soybeans produced could result from

Accepted Answer

A)   elimination of farm subsidies to soybean producers.
B)   a decrease in the price of another farm crop that could be grown.
C)   a decrease in the cost of soybean production.
D)   an increase in consumer incomes.E) A) and B)
F) All of the above

Question 4

Price supports in agriculture have been criticized because they

Accepted Answer

A)   have hastened the exodus of labor from agriculture.
B)   subsidize consumers at the expense of farmers.
C)   help large farmers more than small farmers.
D)   create product shortages.E) B) and C)
F) None of the above

Question 5

Farm programs such as those maintained by the European Union (EU)  and the United States

Accepted Answer

A)   aid developing nations by creating a large market for agriculture.
B)   decrease the incomes of farmers in EU nations and in the United States.
C)   improve efficiency in the allocation of agricultural resources.
D)   distort world trade in agricultural products.E) A) and D)
F) B) and C)

Question 6

A parity ratio of 0.6 in year A means that prices

Accepted Answer

A)   received in year A could buy 60 percent as much as prices received in the base period.
B)   received in the base period could buy 60 percent as much as prices received in year
C)   received in year A had risen by 60 percent over the prices received in the base period.
D)   paid by farmers in year A had risen by 60 percent over the prices paid in the base period.E) A) and D)
F) B) and C)

Question 7

Since 1950, U.S. farm exports have

Accepted Answer

A)   increased as a percentage of U.S. farm output.
B)   declined as a percentage of U.S. farm output.
C)   averaged about 10 percent of U.S. farm output.
D)   averaged about 50 percent of U.S. farm output.E) All of the above
F) None of the above

Question 8

Most of the technological advances in U.S. agriculture are initiated by the following, except

Accepted Answer

A)   government-sponsored agencies.
B)   farmers.
C)   colleges and universities.
D)   suppliers of farm inputs.E) A) and B)
F) A) and C)

Question 9

Farm groups spend considerable amounts of money to maintain and enlarge political support for farm subsidies. This illustrates

Accepted Answer

A)   coalitions.
B)   rent-seeking activity.
C)   the special-interest effect.
D)   the voting paradox.E) A) and B)
F) None of the above

Question 10

Over time, technological change has

Accepted Answer

A)   reduced both the price elasticity and income elasticity of the demand for farm products.
B)   reduced the minimum efficient scale of production in agriculture and increased the prices of farm products.
C)   increased both price elasticity and income elasticity of the demand for farm products.
D)   increased the minimum efficient scale of production in agriculture and reduced the prices of farm products.E) B) and C)
F) C) and D)

Question 11

An international agreement reached in 1994 by the world's trading nations provides for

Accepted Answer

A)   an increase in export subsidies on agricultural products.
B)   an increase in agricultural price supports.
C)   a reduction of tariffs on agricultural products.
D)   an international research organization designed to discover nonfood uses of agricultural output.E) A) and D)
F) B) and C)

Question 12

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

Question 13

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

Question 14

Expanding per capita incomes in the United States have resulted in a(n)

Accepted Answer

A)   more-than-proportionate increase in the demand for agricultural products.
B)   proportionate increase in the demand for agricultural products.
C)   less-than-proportionate increase in the demand for agricultural products.
D)   absolute decline in the amount of agricultural products consumed.E) B) and C)
F) A) and B)

Question 15

The relative price inelasticity of demand for agricultural products has resulted in

Accepted Answer

A)   prices fluctuating more in agriculture than in other industries.
B)   prices fluctuating less in agriculture than in other industries.
C)   higher prices for agricultural products.
D)   lower prices for agricultural products.E) B) and D)
F) None of the above

Question 16

Acreage allotment programs were designed to

Accepted Answer

A)   reduce the supply of agricultural products.
B)   make the demand for farm products more price elastic.
C)   bolster the demand for agricultural commodities.
D)   accelerate the movement of human resources out of farming.E) B) and D)
F) B) and C)

Question 17

Which of the following statements is correct?

Accepted Answer

A)   The price support program hastened the exodus of resources from agriculture.
B)   The main beneficiaries of government price support assistance were the very low income farmers.
C)   If the demand for agricultural products is inelastic, a relatively small decrease in supply will increase gross farm incomes.
D)   There is a misallocation of resources in rural America because of absolute and relative increases in the size of the farm population.E) C) and D)
F) None of the above

Question 18

The concept of parity in farm policy implies that

Accepted Answer

A)   farm incomes should remain stable over the business cycle.
B)   a given output should always provide the farmer with the same real income.
C)   the purchasing power of the farmer's dollar should rise each year.
D)   the prices of farm commodities should remain stable.E) A) and B)
F) A) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The average income of U.S. farm households in 2014 was

Accepted Answer

A)   less than the average income for all households.
B)   about equal to the average income for all households.
C)   about 60 percent higher than the average income of all households.
D)   about 20 percent higher than the average income of all households.E) None of the above
F) A) and B)

Exam 22: Agriculture: Economics and Policy

The average income of U.S. farm households in 2014 was

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Which of the following statements is correct?

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Price supports in agriculture have been criticized because they

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Expanding per capita incomes in the United States have resulted in a(n)

Correct AnswerverifiedShow Answer

Farm groups spend considerable amounts of money to maintain and enlarge political support for farm subsidies. This illustrates

Correct AnswerverifiedShow Answer

The concept of parity in farm policy implies that

Correct AnswerverifiedShow Answer

Over time, technological change has

Correct AnswerverifiedShow Answer

Most of the technological advances in U.S. agriculture are initiated by the following, except

Correct AnswerverifiedShow Answer

The price of a certain farm product was $1.25 in the base period when the parity ratio was 100. If the index of prices paid by farmers is now at 140, then the parity price of this farm product today should be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A parity ratio of 0.6 in year A means that prices

Correct AnswerverifiedShow Answer

Acreage allotment programs were designed to

Correct AnswerverifiedShow Answer

An international agreement reached in 1994 by the world's trading nations provides for

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A decrease in the quantity of soybeans produced could result from

Correct AnswerverifiedShow Answer

The relative price inelasticity of demand for agricultural products has resulted in

Correct AnswerverifiedShow Answer

The Food for Peace program is designed to

Correct AnswerverifiedShow Answer

Since 1950, U.S. farm exports have

Correct AnswerverifiedShow Answer

Farm programs such as those maintained by the European Union (EU) and the United States

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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