Question 1

The major factor contributing to lower prices for many farm products in 1998 and 1999 was

Accepted Answer

Reduced export demand and strong crop production led to an oversupply of farm products, causing prices to decrease. The other options (A, B, and C) are not relevant factors contributing to lower prices for farm products.

Question 2

The Food, Conservation, and Energy Act of 2008 provided three main forms of cash commodity subsidies, including the following, except

Accepted Answer

The Food, Conservation, and Energy Act of 2008 provided three main forms of cash commodity subsidies, which are direct payments, countercyclical payments, and marketing loans. Cash rebates are not a form of commodity subsidies provided by this Act.

Question 3

Price support programs for agricultural products tend to cause shortages of these products.

Accepted Answer

Price support programs for agricultural products typically lead to surpluses, not shortages, because they encourage production by guaranteeing minimum prices for farmers, often above market equilibrium prices.

Question 4

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

Accepted Answer

The answer of Recent government policies to provide price and...

Question 5

The major economic problem with recent farm policies is that they provide price and income subsidies that

Accepted Answer

The answer of The major economic problem with recent farm...

Question 6

Under the Food, Conservation, and Energy Act of 2008, if the target price for a bushel of corn was $2.63 and the price of corn fell to $2.25, then a farmer would have received

Accepted Answer

If the price of corn falls below the target price, the farmer may receive a countercyclical payment to make up the difference. In this case, the target price is $2.63 and the price of corn fell to $2.25, so the farmer would be eligible for a countercyclical payment. Marketing loans and transition payments are not related to target prices, and acreage allotments are a tool to control production levels, not to address price fluctuations.

Question 7

The percentage of total employment in the U.S.that is accounted for by farms has been declining in the last six decades or so, but the absolute number of farm employment has actually risen slightly over those decades.

Accepted Answer

The percentage of total employment in the U.S. accounted for by farms has indeed been declining over the last six decades, and the absolute number of farm employment has also decreased, not risen, due to factors like automation, improved farming techniques, and consolidation of farms into larger operations.

Question 8

The 2014 Agriculture Act aims to achieve the following, except

Accepted Answer

The Agriculture Act does not aim to specifically encourage or force resources to leave farming and move into other productive sectors. Its main goal is to provide stability and support for farmers in the agricultural industry.

Question 9

The effect of higher prices from the domestic sugar beet program in the United States is

Accepted Answer

The higher prices from the domestic sugar beet program result in higher food prices, which are regressive because low-income households spend a larger percentage of their income on food than do high-income households. This means that the burden of the higher price falls disproportionately on low-income consumers, creating economic inefficiency.

Question 10

Due to high fixed costs relative to variable costs in farming, farm production is quite sensitive to price changes in the short run.

Accepted Answer

Farming typically has high variable costs relative to fixed costs, making it less sensitive to short-term price changes as farmers continue to produce to cover variable costs.

Question 11

The three types of farm subsidies under the Food, Conservation, and Energy Act of 2008 are

Accepted Answer

These are the three types of farm subsidies established under the Food, Conservation, and Energy Act of 2008. Direct payments are fixed payments provided to farmers regardless of market conditions. Countercyclical payments are made to farmers when market prices fall below a certain threshold. Marketing loans provide farmers with low-interest loans for their commodities, which can be used as collateral for the loan. The other options listed are not accurate descriptions of farm subsidies established under the act.

Question 12

The parity concept of agricultural policy suggests that farmers should obtain a constant ratio of the prices they receive for their farm products and the prices they pay for goods and services in general.

Accepted Answer

The parity concept of agricultural policy aims to provide farmers with a fair and stable income by ensuring a constant ratio between the prices they receive for their products and the prices they pay for goods and services in general. This concept was introduced in the United States in the 1920s to address the problems of low agricultural prices and overproduction.

Question 13

The U.S.Agriculture Act of 2014 did the following, except

Accepted Answer

The U.S. Agriculture Act of 2014 ended the countercyclical payments to farmers and introduced new insurance programs such as price loss coverage and agricultural risk coverage. However, it did not extend the direct payments to farmers, which were independent of their crop production. In fact, the act eliminated these direct payments and replaced them with the new insurance programs.

Question 14

Which of the following is an effect of the domestic sugar program of the United States on many of the less-developed countries that export sugar?

Accepted Answer

The answer of Which of the following is an effect...

Question 15

The increasing relative importance of agricultural exports has increased the instability of the demand for U.S.farm products.

Accepted Answer

If agricultural exports become a larger portion of a country's economy, the demand for farm products becomes more dependent on global market conditions, which can lead to instability.

Question 16

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

Accepted Answer

When supply exceeds demand, prices tend to fall, leading to a decline in farm income.

Question 17

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

Accepted Answer

As household income rises, the percentage of income spent on food actually decreases. This is because as income rises, consumers are able to allocate more money towards other goods and services beyond basic necessities like food. This phenomenon is known as the Engel's Law.

Question 18

The price elasticity of demand for most agricultural products is relatively low.

Accepted Answer

Agricultural products are often considered to be necessities or staples, and the availability of substitutes is limited. Therefore, consumers are less likely to reduce their quantity demanded significantly in response to a change in price, resulting in a low elasticity of demand.

Question 19

Technological advances have occurred throughout the history of agriculture, resulting in higher productivity but lower incomes to farmers.

Accepted Answer

Technological advances in agriculture have often led to increased productivity and efficiency, but they have also resulted in lower prices for agricultural commodities due to oversupply and decreased demand for labor, ultimately leading to lower incomes for farmers.

Question 20

The farm price-support programs hurt consumers of the farm products, and moreover, the burden tends to be disproportionately heavier on the low-income consumers.

Accepted Answer

The farm price-support programs lead to higher prices for agricultural products, ultimately hurting the consumers who have to pay more for these products. Low-income consumers tend to be affected more as they have less disposable income to spend on food.

Quiz 22: Agriculture: Economics and Policy