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| 1 | |
Because the marginal utility of food diminishes rapidly: |
| | A) | the supply of agricultural products is elastic |
| | B) | the supply of agricultural products is inelastic |
| | C) | the demand for agricultural products is elastic |
| | D) | the demand for agricultural products is inelastic |
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| 2 | |
The demand for barley is inelastic. Accordingly, barley farmers' aggregate income will: |
| | A) | rise in high-yield years and fall in low-yield years |
| | B) | rise in low-yield years and fall in high-yield years |
| | C) | rise over time |
| | D) | fall over time |
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| 3 | |
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 |
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| 4 | |
Because farmers' fixed costs are high compared to their variable costs, short-run farm production is relatively insensitive to price changes. |
| | A) | True |
| | B) | False |
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| 5 | |
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 |
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| 6 | |
Since 1960, total farm employment has: |
| | A) | decreased both absolutely and as a proportion of total employment |
| | B) | increased absolutely, but decreased as a proportion of total employment |
| | C) | remained about the same, but decreased as a proportion of total employment |
| | D) | fallen in relation to manufacturing employment, but risen in relation to service employment |
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| 7 | |
Which best expresses the concept of parity? |
| | A) | Total farm employment should remain the same over time |
| | B) | Agricultural prices should remain constant over time |
| | C) | Farm income should increase at the same rate as the total population |
| | D) | Prices of farm products should increase at the same rate as the prices farmers pay for goods and services |
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| 8 | |
Use the following diagram of the corn market to answer the next question. Assume both the demand and the supply of corn are inelastic.
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Refer to the diagram. If the government supports price B in this market, all of the following will result except: |
| | A) | a surplus of LG is created |
| | B) | total farm income increases from OAJH to OBCG |
| | C) | government transfers LKCG from taxpayers to farmers |
| | D) | aggregate consumer expenditures on corn decrease |
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| 9 | |
Which of the following government programs stimulates demand in order to reduce agricultural surpluses created by farm subsidies? |
| | A) | Farm Act of 2002 |
| | B) | Food for Peace |
| | C) | Freedom to Farm Act of 1996 |
| | D) | Import quotas and tariffs |
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| 10 | |
U.S. farm policy: |
| | A) | lowers the price of farm land, hurting landowners relative to tenant farmers |
| | B) | directs farm aid disproportionately to high-income farmers |
| | C) | provides retraining and transitional support to farmers willing to leave the industry |
| | D) | results in an underallocation of resources to farming |
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