Question 1

Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows.

Accepted Answer

To avoid the risk of lower prices in the...

Question 2

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Accepted Answer

A)   causes prices to fall.
B)   causes prices to rise.
C)   causes prices to remain constant.
D)   may cause prices to rise, fall, or remain the same, depending upon the relative shifts in the supply and demand curves.E) All of the above
F) A) and B)

Question 3

Exhibit 39-2
 1,what price does the consumer pay? A)  P1. B)  P0. C)  P2. D)  a price not shown on the diagram." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 39-2.Given a target price of P1,what price does the consumer pay?

Accepted Answer

A)   P1.
B)   P0.
C)   P2.
D)   a price not shown on the diagram.E) A) and C)
F) C) and D)

Question 4

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions,then

Accepted Answer

A)   price changes are likely to be small, and farm revenues are likely to be highly volatile.
B)   price changes are likely to be large, and farm revenues are likely to be highly volatile.
C)   prices are likely to be constant, and farm revenues are likely to be constant.
D)   prices are likely to be constant, and farm revenues are likely to be highly volatile.
E)   price changes are likely to be small, and farm revenues are likely to be constant.F) A) and E)
G) None of the above

Question 5

Exhibit 39-9
 1,the per-unit deficiency payment will be: A)  P2 - P4. B)  P1 - P3. C)  P2 - P3. D)  P1 - P2. E)  none of the above" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Accepted Answer

A)   P2 - P4.
B)   P1 - P3.
C)   P2 - P3.
D)   P1 - P2.
E)   none of the aboveF) A) and B)
G) C) and D)

Question 6

In general,agricultural price supports

Accepted Answer

A)   raise food prices.
B)   have no impact on food prices.
C)   are designed to lower food prices.
D)   c and dE) B) and D)
F) All of the above

Question 7

Exhibit 39-2
 1 is a price support,the cost of the price support program to the government is A)  P1 x Q2. B)  P1 x (Q2 - Q0) . C)  P1 x (Q0 - Q1) . D)  P1 x (Q2 - Q1) . E)  none of the above" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 39-2.If P1 is a price support,the cost of the price support program to the government is

Accepted Answer

A)   P1 x Q2.
B)   P1 x (Q2 - Q0) .
C)   P1 x (Q0 - Q1) .
D)   P1 x (Q2 - Q1) .
E)   none of the aboveF) C) and D)
G) A) and E)

Question 8

In agriculture during much of the 20th century,supply grew more than demand.Which two farm problems are these?

Accepted Answer

A)   the high-productivity problem and the income elasticity problem
B)   the low-productivity problem and the income inelasticity problem
C)   the high-productivity problem and the income inelasticity problem
D)   the low-productivity problem and the income elasticity problem
E)   none of the aboveF) B) and C)
G) B) and D)

Question 9

An increase in the supply of corn will lower the total revenue from corn if

Accepted Answer

A)   the demand curve for corn is inelastic between the current and new price of corn.
B)   the demand curve for corn is elastic between the current and new price of corn.
C)   there are many substitutes for corn.
D)   there are only a few substitutes for corn.
E)   none of the aboveF) C) and D)
G) A) and B)

Question 10

If a farmer rents the land he works on,then any price support or deficiency payments he receives __________ capitalized into the value of that land,and so his economic profit from farming __________.

Accepted Answer

A)   are; goes to zero
B)   are; remains positive
C)   are not; goes to zero
D)   are not; remains positiveE) None of the above
F) A) and C)

Question 11

Explain how nonrecourse loans operate and how they help to support crop prices.

Accepted Answer

A nonrecourse loan is the major way the ...

Question 12

If income elasticity of demand for food is 1.75 it follows that

Accepted Answer

A)   a 10 percent rise in the price of food lowers the quantity demanded of food by 17.5 percent.
B)   if income rises by 10 percent, consumption of food rises by 17.5 percent.
C)   if income rises by 10 percent, consumption of food falls by 17.5 percent.
D)   a 1 percent rise in the price of food decreases the quantity demanded of food by 1.75 percent.
E)   none of the aboveF) D) and E)
G) C) and D)

Question 13

Agricultural price supports refer to

Accepted Answer

A)   minimum prices set by the government on certain farm products.
B)   maximum prices set by the government on certain farm products.
C)   supply-restricting policies imposed by the government on certain farm products.
D)   b and c
E)   none of the aboveF) B) and C)
G) C) and E)

Question 14

Exhibit 39-1
 T,the total deficiency payment made by the government is the area of A)  0P1CQ2. B)  0PTBQ2. C)  PTBCP1. D)  PTBEP2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 39-1.Given the target price PT,the total deficiency payment made by the government is the area of

Accepted Answer

A)   0P1CQ2.
B)   0PTBQ2.
C)   PTBCP1.
D)   PTBEP2.E) B) and C)
F) A) and B)

Question 15

When productivity increases in the production of agricultural products,the supply curve for agricultural products shifts rightward.

Accepted Answer

A) True 
 B)False

Question 16

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Accepted Answer

A)   history of production.
B)   income.
C)   location.
D)   b and c
E)   none of the aboveF) A) and E)
G) B) and D)

Question 17

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Accepted Answer

A)   a price support.
B)   an acreage allotment program.
C)   a target price.
D)   any of the aboveE) All of the above
F) B) and C)

Question 18

Studies show that,in the United States,

Accepted Answer

A)   price elasticity of demand for agricultural products has hovered around 3.2 for many years.
B)   as real income has been increasing, the per-capita demand for food has been decreasing.
C)   as real income has been increasing, the per-capita demand for food has been increasing by much more.
D)   none of the aboveE) A) and D)
F) B) and C)

Question 19

Increased productivity in the agricultural sector has __________ the output and __________ the prices of agricultural goods.

Accepted Answer

A)   increased; reduced
B)   increased; increased
C)   decreased; reduced
D)   decreased; increased
E)   had no impact on; had no impact onF) A) and B)
G) B) and C)

Question 20

A shift of the supply curve for farm products to the right in a price inelastic region of the demand curve for farm products

Accepted Answer

A)   reduces price and total revenue.
B)   increases price and reduces total revenue.
C)   reduces price and increases total revenue.
D)   increases prices and total revenue.E) None of the above
F) B) and D)

Exam 39: Agriculture: Problems, Policies, and Unintended Effects

In agriculture during much of the 20th century,supply grew more than demand.Which two farm problems are these?

Correct AnswerverifiedShow Answer

An increase in productivity in the agricultural sector in conjunction with an income inelastic demand for farm products

Correct AnswerverifiedShow Answer

In general,agricultural price supports

Correct AnswerverifiedShow Answer

An increase in the supply of corn will lower the total revenue from corn if

Correct AnswerverifiedShow Answer

Exhibit 39-2 -Refer to Exhibit 39-2.Given a target price of P1,what price does the consumer pay?

Correct AnswerverifiedShow Answer

Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price PT,the total deficiency payment made by the government is the area of

Correct AnswerverifiedShow Answer

If income elasticity of demand for food is 1.75 it follows that

Correct AnswerverifiedShow Answer

Agricultural price supports refer to

Correct AnswerverifiedShow Answer

If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions,then

Correct AnswerverifiedShow Answer

If a farmer rents the land he works on,then any price support or deficiency payments he receives __________ capitalized into the value of that land,and so his economic profit from farming __________.

Correct AnswerverifiedShow Answer

Explain how nonrecourse loans operate and how they help to support crop prices.

Correct AnswerverifiedA nonrecourse loan is the major way the ...View AnswerShow Answer

Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows.

Correct AnswerverifiedTo avoid the risk of lower prices in the...View AnswerShow Answer

Exhibit 39-2 -Refer to Exhibit 39-2.If P1 is a price support,the cost of the price support program to the government is

Correct AnswerverifiedShow Answer

If the government attempts to aid farmers by implementing a policy that results in a leftward shift in the supply curve of agricultural products,the policy in question is most likely

Correct AnswerverifiedShow Answer

A shift of the supply curve for farm products to the right in a price inelastic region of the demand curve for farm products

Correct AnswerverifiedShow Answer

Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P1,the per-unit deficiency payment will be:

Correct AnswerverifiedShow Answer

When productivity increases in the production of agricultural products,the supply curve for agricultural products shifts rightward.

Correct AnswerverifiedShow Answer

Studies show that,in the United States,

Correct AnswerverifiedShow Answer

In the acreage allotment program,a farmer's acreage allotment is sometimes based on a farmer's

Correct AnswerverifiedShow Answer

Increased productivity in the agricultural sector has __________ the output and __________ the prices of agricultural goods.

Correct AnswerverifiedShow Answer

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Exhibit 39-2 -Refer to Exhibit 39-2.Given a target price of P₁,what price does the consumer pay?

Correct Answer
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Exhibit 39-1 -Refer to Exhibit 39-1.Given the target price P_T,the total deficiency payment made by the government is the area of

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If a farmer rents the land he works on,then any price support or deficiency payments he receives capitalized into the value of that land,and so his economic profit from farming .

Correct Answer
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Correct Answer
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A nonrecourse loan is the major way the ...
View Answer

Correct Answer
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To avoid the risk of lower prices in the...
View Answer

Exhibit 39-2 -Refer to Exhibit 39-2.If P₁is a price support,the cost of the price support program to the government is

Correct Answer
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Correct Answer
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Correct Answer
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Exhibit 39-9 -Refer to Exhibit 39-9.Under a target price system,with the target price set at P₁,the per-unit deficiency payment will be:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Increased productivity in the agricultural sector has the output and the prices of agricultural goods.

Correct Answer
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