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Agricultural Economics 429
Fall 2014 Exam #1
1. ________
2. ________
3. ________
4. ________
5. ________
Total
1a. (6 pts.)
1b. (6 pts.)
1c. (6 pts.)
________
A lot of attention has been focused on the forces of change in agriculture. List one
of the forces discussed in class and provide an example of how it acts as a force of
change in agricultural policy.
What factors influence a person’s policy position? Under what circumstances
could a person’s policy position be wrong?
It was mentioned in class that Senators often have a broader perspective on policy
issues than members of the House of Representatives? Why?
Write the letter corresponding to the most appropriate answer in the blank provided:
_______2a. (4 pts.) Changes to which of the following would cause movement along a
demand curve, rather than a change (shift) in demand?
A.
Income
B.
Population
C.
Own Price
D.
Taste and Preferences
_______2b. (4 pts.) Which of the following is NOT one of the functions of Congress?
A.
B.
C.
D.
Oversight of the Executive Branch
Authorization of Legislation
Appropriation of Spending dollars
Execution of Laws
_______2c. (4 pts.) Which of the following is NOT one of the factors that influence policy
decisions?
A.
B.
C.
D.
E.
Values
Facts
Beliefs
Myths
None of the Above
_______2d. (4 pts.)
A.
B.
C.
D.
E.
Which of the following is not a true statement?
Farming accounts for a small percent of the total workforce.
The entire food and fiber system accounts for about 17% of the workforce.
The entire food and fiber system accounts for about .7% of GDP.
All are not true
All are true
_______2e. (4 pts.)
A.
B.
C.
D.
E.
One of the characteristics of agricultural and food policy is?
Changes are made in small increments
Changes are drastic from farm bill to farm bill
There are very few changes
None of the Above
All of the above
_______2f. (4 pts.)
Which of the following are true about policy and programs:
A.
B.
C.
Programs implement policy.
A policy is a broad guiding principle for action.
It is not important whether the Congress shares the President’s policy
vision.
D.
E.
All of the above
None of the above
_______2g. (4 pts.) Which of the following is not one of the assumptions of perfectly
competitive markets?
A.
B.
C.
D.
E.
Freedom of market entry exists for both buyers and sellers
Many small firms so that no one firm can affect price
The commodity is homogeneous meaning there are no quality differences
All of the above
None of the above
_______2h. (4 pts.) For most agricultural commodities, prices are determined by:
A.
B.
C.
D.
E.
3a. (6 pts.)
Futures markets
International markets
Farm policy
All of the above
None of the above
If the price of corn in equilibrium is $4.00 per bushel and the quantity supplied
equals quantity demanded at 200 bushels. What would happen to the quantity
demanded if the price decreased by 50% to $2.00 per bushel assuming the demand
elasticity is -.8? Show your work
3b. (6 pts.) Explain what capitalization means. What does it have to do with agricultural
policy?
3c. (6 pts.)
The policy process has been described as a lot like making sausage. Why? Why is
it so important to understand how policy is made?
4a. (6 pts.)
Why do farmers look at crop insurance differently than other expenses on their
operation such as seed or fertilizer? What has been the most important factor
contributing to the increase in the number of farmers purchasing crop insurance
and their purchasing higher levels of coverage?
4b. (6 pts.)
Who is in charge of the policy process in the Federal Government? Why is having
the majority in Congress so important to those working in Washington D.C.?
4c. (6 pts.)
What is the law of unintended consequences? What is the relationship between the
law of unintended consequences and agricultural policy?
5a. (6 pts.)
In crop insurance terms, what does a loss ratio of 2.25 mean? Are these farmers
being subsidized by farmers in other states or are they subsidizing other states’
farmers? If you were a farmer would you want to always have a loss ratio over 1?
5b. (10 pts.)
Describe how a bill becomes a law. Be sure to explain the importance of the
conference committee in this process.