Question 1

The impact of price supports is to

Accepted Answer

A)  Reduce the market price.
B)  Shift the demand curve for each farmer to the left.
C)  Increase the output of farmers.
D)  Decrease the output of farmers.

Question 2

The Department of Agriculture distributes $150-$200 million a year to farmers to help defray the costs of fertilizer,drainage,and other production costs.

Accepted Answer

A) True 
 B)False

Question 3

The 2001 amendment to the Commodity Credit Corporation (CCC) loan program tends to

Accepted Answer

A)  Reduce upward price swings.
B)  Intensify upward price swings.
C)  Reduce downward price swings.
D)  aggravate downward price swings.

Question 4

Irrigation water delivered by federally funded reclamation projects is classified as

Accepted Answer

A)  A farm cost subsidy.
B)  Parity prices.
C)  An income support program.
D)  A price support policy.

Question 5

Demand for U.S.farm products was high during World War I.

Accepted Answer

A) True 
 B)False

Question 6

If a farmer sells a crop and uses some of the proceeds to repay the Commodity Credit Corporation (CCC) ,the market price is

Accepted Answer

A)  Higher than the countercyclical payment.
B)  Lower than the loan rate.
C)  Lower than the countercyclical payment.
D)  Higher than the loan rate.

Question 7

Wide price swings in farm products are the result of

Accepted Answer

A)  Supply shifts and the relatively inelastic demand for food.
B)  Supply shifts and the relatively elastic demand for food.
C)  The high income elasticity of food demand.
D)  Demand shifts and the relatively elastic supply of food.

Question 8

The 1996 Farm Act actually increased the level of government assistance to farmers.

Accepted Answer

A) True 
 B)False

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.

Question 10

1 and a Commodity Credit Corporation (CCC) loan rate set above P1.Given this situation,cotton farmers are most likely to A) Sell their cotton on the market and repay the CCC loan with the proceeds plus other funds to make up the difference. B) Sell their cotton on the market and repay only a portion of the CCC loan. C) Give their cotton to the CCC and not repay the loan. D) Leave the cotton farming business." 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.Given this situation,cotton farmers are most likely to

Accepted Answer

A)  Sell their cotton on the market and repay the CCC loan with the proceeds plus other funds to make up the difference.
B)  Sell their cotton on the market and repay only a portion of the CCC loan.
C)  Give their cotton to the CCC and not repay the loan.
D)  Leave the cotton farming business.

Question 11

Suppose a bumper wheat crop results in a 40 percent increase in output and sales,while the price elasticity of demand for wheat is about 0.8.Ceteris paribus,prices should

Accepted Answer

A)  Rise by 8 percent.
B)  Fall by 8 percent.
C)  Rise by 50 percent.
D)  Fall by 50 percent.

Question 12

In 2001 the U.S.Congress did all of the following except

Accepted Answer

A)  Increase existing subsidies paid to farmers.
B)  Create new subsidy programs.
C)  Increase loan deficiency payments.
D)  Reduce acreage set-asides.

Question 13

The government inflates the demand for farm products

Accepted Answer

A)  By purchasing surplus crops.
B)  Through marketing orders.
C)  Through acreage set-asides.
D)  With price supports.

Question 14

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.

Question 15

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.

Question 16

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.

Question 17

Explain why abrupt changes in farm output have a magnified effect on market prices.

Accepted Answer

Abrupt changes in farm output ...

Question 18

Individual farmers behave like perfect competitors but are still able to earn economic profits in the long run.

Accepted Answer

A) True 
 B)False

Question 19

Suppose European incomes increase by 4 percent per year,and as a result,U.S.exports of farm goods to Europe rise by 1 percent per year.The income elasticity that can be computed from this information is

Accepted Answer

A)  0.25.
B)  4.0.
C)  0.5.
D)  2.0.

Question 20

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 percent

Exam 29: The Farm Problem

Which of the following characterizes a competitive agricultural market?

Correct AnswerverifiedShow Answer

The 1996 Farm Act actually increased the level of government assistance to farmers.

Correct AnswerverifiedShow Answer

The 2001 amendment to the Commodity Credit Corporation (CCC) loan program tends to

Correct AnswerverifiedShow Answer

The Department of Agriculture distributes $150-$200 million a year to farmers to help defray the costs of fertilizer,drainage,and other production costs.

Correct AnswerverifiedShow Answer

Suppose European incomes increase by 4 percent per year,and as a result,U.S.exports of farm goods to Europe rise by 1 percent per year.The income elasticity that can be computed from this information is

Correct AnswerverifiedShow Answer

Irrigation water delivered by federally funded reclamation projects is classified as

Correct AnswerverifiedShow Answer

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.Given this situation,cotton farmers are most likely to

Correct AnswerverifiedShow Answer

Individual farmers behave like perfect competitors but are still able to earn economic profits in the long run.

Correct AnswerverifiedShow Answer

Demand for U.S.farm products was high during World War I.

Correct AnswerverifiedShow Answer

Explain why abrupt changes in farm output have a magnified effect on market prices.

Correct AnswerverifiedAbrupt changes in farm output ...View AnswerShow Answer

The impact of price supports is to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a farmer sells a crop and uses some of the proceeds to repay the Commodity Credit Corporation (CCC) ,the market price is

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 2001 the U.S.Congress did all of the following except

Correct AnswerverifiedShow Answer

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

Wide price swings in farm products are the result of

Correct AnswerverifiedShow Answer

Suppose a bumper wheat crop results in a 40 percent increase in output and sales,while the price elasticity of demand for wheat is about 0.8.Ceteris paribus,prices should

Correct AnswerverifiedShow Answer

The government inflates the demand for farm products

Correct AnswerverifiedShow Answer

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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.Given this situation,cotton farmers are most likely to

Correct Answer
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Abrupt changes in farm output ...
View 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.

Correct Answer
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Correct Answer
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Correct Answer
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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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Correct Answer
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