Economics (McConnell) AP Edition, 19th Edition

Chapter 19: Agriculture: Economics and Policy

Quiz

1
Use the following diagram to answer the next question.

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Refer to the diagram. Qp, Qn and Qb correspond to poor, normal, and bumper crop levels, respectively. Compared to a normal year, if farmers produce a bumper crop, gross farm income will:
A)increase because demand is elastic
B)decrease because demand is elastic
C)increase because demand is inelastic
D)decrease because demand is inelastic
2
For most agricultural products, demand:
A)has generally trended downward over time as incomes have increased
B)has remained constant even as the population has increased
C)has generally increased more slowly than the increase in supply
D)is elastic
3
In 1994, the nations belonging to the World Trade Organization agreed to reduce farm price support programs in order to:
A)increase the amount of money available for foreign aid
B)reduce agricultural overproduction by developing countries
C)reduce economic distortions and international misallocation of agricultural resources
D)reduce government deficits worldwide
4
The 1996 law ending price supports on wheat, corn, and other crops was known as the:
A)Parity Act
B)Freedom to Farm Act
C)Farm Act
D)Farmer Independence Act
5
Agricultural price supports based on per-bushel production:
A)increase domestic quantity demanded
B)make domestic demand more inelastic
C)disproportionately benefit large farmers
D)reduce agricultural imports
6
Use the following diagram of the U.S. corn market to answer the next question.

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Refer to the diagram: Prior to 1996, U.S. farm policy would most likely have:
A)raised price to B, resulting in a surplus
B)lowered price to M, resulting in a shortage
C)lowered price to M, resulting in a surplus
D)left price at A, reflecting a laissez-faire policy
7
If in a certain year the indices of prices received and paid by farmers were 140 and 200 respectively, the parity ratio would be:
A)30
B)60
C)70
D)1.43
8
Use the following diagrams to answer the next question.

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Refer to the diagrams. Which diagram best illustrates the long-run impacts of changes in technology and U.S. population on total farm production and prices?
A)A
B)B
C)C
D)D
9
U.S. farmers' incomes are unstable in the short run, primarily owing to:
A)changes in price support programs with each new congress
B)fluctuations in U.S. agricultural imports that have caused wide swings in prices of food products
C)swings in crop yields and export demand, coupled with inelastic demand
D)rapid changes in technology coupled with slow population growth
10
Over the long-run, the number of farm households has declined in part because:
A)the demand for farm products is price-elastic
B)the demand for farm products is inelastic with respect to both price and income
C)farm productivity has increased at a much slower pace than in the manufacturing and service sectors
D)government policies have resulted in chronic shortages in critical markets
McConnell Economics Nineteenth Edition Large Cover Image
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