Question 1

The farming industry experiences high barriers to entry because of the large amounts of acreage and expensive equipment that are needed.

Accepted Answer

The answer of The farming industry experiences high barriers to...

Question 2

Since 1929, there have been very few advances in farming technology.

Accepted Answer

This statement is false. There have been significant advances in farming technology since 1929, including the development of genetically modified crops, precision agriculture, and robotics.

Question 3

The 2007 Farm Act was set to expire in 2012 for all of the following reasons except

Accepted Answer

The 2007 Farm Act was not set to expire due to the distribution of farm subsidies across congressional districts. The distribution of subsidies is a reflection of the agricultural landscape and political representation rather than a reason for the act's expiration.

Question 4

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

Accepted Answer

In 2001, the U.S. Congress increased existing subsidies for farmers, created new subsidy programs, and increased loan deficiency payments, but it did not reduce acreage set-asides. Acreage set-asides are programs that pay farmers to not plant crops on part of their land to reduce supply and increase crop prices.

Question 5

Agriculture industries are notorious for having barriers to entry.

Accepted Answer

The answer of Agriculture industries are notorious for having barriers...

Question 6

If the price elasticity of demand for farm products is low, abrupt changes in farm output will have a limited effect on prices.

Accepted Answer

A low price elasticity of demand means that consumers' demand for a product does not change significantly when its price changes. Therefore, abrupt changes in farm output would lead to significant changes in prices because the quantity demanded remains relatively stable even as the quantity supplied fluctuates.

Question 7

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

Accepted Answer

In perfect competition, economic profits are driven to zero in the long run due to the entry of new firms. Therefore, individual farmers cannot earn economic profits in the long run.

Question 8

The intent of the 1996 Freedom to Farm Act was to accomplish all of the following except

Accepted Answer

The 1996 Freedom to Farm Act was intended to increase the role of market forces in agriculture and reduce government intervention. It aimed to improve allocative efficiency by allowing farmers to make planting decisions based on market conditions rather than government subsidies. It also aimed to reduce farm program costs and provide greater flexibility to farmers in managing their operations. However, the Act did not have the objective of increasing interest rates charged to farmers or reducing prices to consumers.

Question 9

The 1990 Farm Act

Accepted Answer

The 1990 Farm Act, also known as the Food, Agriculture, Conservation, and Trade Act of 1990, aimed to reduce government intervention in agriculture, which included reducing target prices for farm products.

Question 10

The 1996 Freedom to Farm Act did all of the following except

Accepted Answer

The 1996 Freedom to Farm Act aimed to decrease government regulation of farming, not increase it. Therefore, option D is the correct answer. The act eliminated target prices and deficiency payments, and refocused farm policy towards stabilizing farm incomes rather than prices. Additionally, the act eliminated many restrictions on acreage set-asides, allowing farmers to plant on all their land without penalty.

Question 11

Because there are 2 million farms in the United States, individual farmers have some market power.

Accepted Answer

Despite the large number of farms, most are small and thus have little market power individually. Market power is often concentrated in the hands of a few large agribusinesses.

Question 12

The 1990 Farm Act resulted in all of the following except

Accepted Answer

The 1990 Farm Act aimed at reducing government intervention in the agricultural market, which included measures like lowering target prices and reducing set-aside acreage to encourage more market-oriented production. This would naturally lead to fewer surpluses being stored in government warehouses as more products were sold on the market, contradicting the idea of an increase in government purchases of surpluses.

Question 13

The principal cause of a third farm depression beginning in 1997 was

Accepted Answer

The Asian economic crisis of 1997 led to decreased demand for agricultural exports from the United States, contributing significantly to the farm depression that began in that year.

Question 14

According to "Corn Acres Expected to Soar in 2007; USDA Says Ethanol, Export Demand Lead to Largest Planted Area in 63 Years," all of the following occurred in response to the high demand for corn for the use in ethanol in 2006 except

Accepted Answer

The high demand for corn for ethanol use led to farmers reallocating their land to grow more corn, which resulted in decreased acres for other crops like soybeans and cotton. However, this shift in crop production would typically lead to higher prices for soybeans and cotton due to reduced supply, not lower prices as stated in option D.

Question 15

The 1996 Freedom to Farm Act

Accepted Answer

The 1996 Freedom to Farm Act further deregulated the farming industry by removing acreage and price controls on certain crops, allowing farmers to plant what they wanted and receive market prices for their goods. This act aimed to reduce government subsidies and allow the market to dictate prices and production levels.

Question 16

The Farm Security Act of 1985

Accepted Answer

The Farm Security Act of 1985 gradually decreased government support prices as part of its policy to reduce federal expenditure on farm subsidies and to help align U.S. agriculture more closely with market forces.

Question 17

To help farmers rebound from the Asian crisis, Congress did all of the following except

Accepted Answer

Congress did not raise all price ceilings on farm products to help farmers rebound from the Asian crisis.

Question 18

The "Asian crisis" was responsible for all of the following effects on U.S.agriculture beginning in 1998 except

Accepted Answer

The Asian crisis had no effect on the regulation of farmers in the US. However, it did lead to a decrease in farm exports to Asia, which impacted grain prices and employment in the US farm equipment industry.

Question 19

Changes in weather cause abrupt shifts in the food supply curve that result in price fluctuations.

Accepted Answer

Changes in weather can affect crop yields and availability, which can lead to changes in the food supply curve and result in price fluctuations. For example, droughts can reduce crop yields and lead to a decrease in the supply of certain foods, causing prices to rise. On the other hand, ideal weather conditions can lead to an abundance of crops and increase the supply, causing prices to fall.

Question 20

The demand for food is price-inelastic.

Accepted Answer

The demand for food is essential and necessary for survival, making it price-inelastic. This means that even if the price of food increases, people will still continue to purchase it because they need it to survive.

Quiz 15: The Farm Problem