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22-81
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Dif f i cul t y : 02 Medium
Learning Objective: 22-03 Relate the rationale for farm subsidies and the economics and
politics of price supports price floors.
Test Bank: II
Topic: Economics of Farm Policy
181.
Price
Quantity Supplied (Bushels)
Quantity Demanded (Bushels)
$4
100
400
5
140
340
6
180
280
7
220
220
8
260
160
9
300
100
10
340
40
Refer to the table. If government adopts a price support program that sets the price at $8,
then there will be a
182.
Price
Quantity Supplied (Bushels)
Quantity Demanded (Bushels)
$4
100
400
5
140
340
6
180
280
7
220
220
22-82
8
260
160
9
300
100
10
340
40
Refer to the table. If government adopts a price support program that sets the price at $9,
then the total amount that private buyers would pay for this agricultural product is
183.
Price
Quantity Supplied (Bushels)
Quantity Demanded (Bushels)
$4
100
400
5
140
340
6
180
280
7
220
220
8
260
160
9
300
100
10
340
40
Refer to the table. If government adopts a price support program that sets the price at $9,
then the total amount that government will pay to farmers of this product is
A. $300.
22-83
184.
The agricultural price support program in the United States has resulted in
185.
Because the demand for agricultural products is price-inelastic, price support programs
tend to
D.
cause farm incomes to fluctuate more than they would without such programs.
186.
If government establishes a system of price supports, it is in effect setting a
A. price ceiling.
187.
A decrease in the quantity of soybeans produced could result from
D.
an increase in consumer incomes.
188.
If price supports are established and producers are producing more than consumers
want to buy at that price, to maintain producers' income the government will have to
A.
reduce price supports.
22-85
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: II
Topic: Economics of Farm Policy
189.
In a purely competitive market, how would a surplus of a product be eliminated?
D.
The quantity demanded for the product would decrease.
190.
Which of the following statements describes how a price-change in a purely
competitive market would eliminate the surplus of an agricultural commodity?
A.
As the price increases, the quantity demanded increases while the quantity supplied
decreases.
191.
The federal government has tried to eliminate agricultural surpluses by
A.
decreasing supply and demand.
22-86
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C.
decreasing supply and increasing demand.
D. increasing supply and decreasing demand.
192.
Government and private efforts to promote the production of "gasohol" using corn-
based ethanol are an attempt to
A. increase the supply of certain farm products.
193.
The government’s promotion of greater production and use of corn-based ethanol was
intended to
A. reduce the price of ethanol-blended gasoline.
194.
Facets of the U.S. government's ethanol program include the following, except
A.
tariffs on imported ethanol.
22-87
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Dif f i cul t y : 02 Medium
Learning Objective: 22-03 Relate the rationale for farm subsidies and the economics and
politics of price supports price floors.
Test Bank: II
Topic: Economics of Farm Policy
195.
Acreage allotments, which limit the number of acres planted with a particular crop,
have an effect on the crop's price that is
D.
disadvantageous to the farmers of the crop.
196.
Comparing an acreage allotment program versus a taxpayer-subsidized price-support
program, the acreage allotment program
A. and the price-support program have similar costs to the taxpayers.
197.
Federal food distribution programs, such as the food stamp program, represent efforts
to
A. increase supplies of agricultural commodities.
198.
As a result of the acreage allotment programs, we would expect
A. the best farmland to be taken out of production by farmers.
199.
The Food for Peace program
A.
established price supports of 100 percent of parity.
22-89
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Dif f i cul t y : 02 Medium
Learning Objective: 22-03 Relate the rationale for farm subsidies and the economics and
politics of price supports price floors.
Test Bank: II
Topic: Economics of Farm Policy
200.
Agricultural price supports have been criticized because they
A.
hasten the exodus of labor from agriculture.
201.
A major criticism of agricultural subsidies is that
A.
they restrict agricultural output but reduce farm incomes when demand is inelastic.
202.
Farm policy in the U.S. has been heavily criticized for the following, except
A.
being fraught with policy contradictions.
22-90
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
directing most subsidies to the wealthier farmers.
C.
benefiting foreign farmers, rather than domestic farmers.
D. delaying the shift of resources away from agriculture.
203.
Which group of farmers benefits the least from price supports in agriculture?
A.
those farmers receiving the highest average farm-family income
204.
A major criticism of the parity concept is that
22-91
205.
The fundamental cause of agricultural price and income instability in the United States
has been a(n)
A.
lack of foreign demand for U.S. agricultural products.
206.
Public choice theory would suggest that the lobbying of Congress by farm organizations
for legislation that would increase the appropriations from the U.S. government for
agricultural programs is
an example of
A. revealed preference.
207.
To get the U.S. Senate to pass a farm bill, a U.S. senator from a farm state asks for the
support of a U.S. senator from an urban state. The urban-state senator agrees to support the
bill, if in return the
farm-state senator supports a bill for a mass transit project. This
situation is an example of
A.
the paradox of voting.
22-92
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
rent-seeking behavior.
C.
political logrolling.
D. the median voter model.
208.
Which of the following is not a reason to predict that farm subsidies might decline in
the future?
A. a declining farm population
209.
Many members of Congress who represent urban low-income areas vote in favor of
farm subsidies. In return, many representatives of agricultural areas support programs such
as food stamps,
which provide benefits for the urban poor. This situation would be an
example of
A.
confusing symptoms with causes.
22-93
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 22-04 Describe major criticisms of the price-support system in
agriculture.
Test Bank: II
Topic: Criticisms and Politics
210.
Farm programs such as those maintained by the European Union (EU) and the United
States
A.
aid developing nations by creating a large market for agriculture.
211.
Overproduction of farm products in the European Community has been primarily the
result of
A. low U.S. tariffs on imports of farm products.
212.
A major feature of the "Freedom to Farm" Act of 1996 was the
