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Micro Chapter 22
| Question | Answer |
|---|---|
| Economics of Agriculture characteristics: Diverse ____ Farm _____ ___ products | Diverse industry Farm commodities Food products |
| Short run price and income instability: demand is elastic or inelastic? fluctuations in _____ and _____ | -Inelastic demand -fluctuations in output -fluctuations in demand |
| There is a big fluctuation on what firms can produce because of ___ ______ | bad weather |
| The Long Run: A Declining Industry Supply increases due to: _____ progress: higher _____ results in less demand, so farmers must charge ____ money Lagging demand because: ____ with respect to income P____ ____ has been slow | Technological progress: higher supply results in less demand, so farmers must charge less money Inelastic with respect to income Population growth has been slow |
| A declining industry Major consequences: massive ____ of workers farm labor is now only ___% of work force we need ___ farmers | -massive exit of workers -farm labor is now only 1.4% of work force we need less farmers |
| Economics of Farm Policy (1 of 2) Subsidized (supported financially) since 1930s: support for ____ prices, i____, o____ Farm c___ Crop i____ Subsidized sale of ____ ____ in world markets | Support for agricultural prices, income, and output Farm credit Crop insurance Subsidized sale of farm products in world markets |
| Economics of Farm Policy (2 of 2) Rationale for farm subsidies: Necessity of ____ "_____ ____ " institution Extraordinary ____ Competitive markets for ____ while inputs have considerable ____ ____ | Necessity of life "Family farm" institution Extraordinary hazards output; market power |
| Parity Concept: Particular real _____ results in same ____ _____ Preserve p_____ p_____ Rationale for _____ _____ | Particular real output results in same real income. Preserve purchasing power. Rationale for price supports. |
| Parity concept example: The idea is that on a year-to-year basis for a fixed output of farm products, a farmer should be able to acquire a specific... | total amount of other goods and services |
| Economics of Price Supports Effective _____ _____ Generates _____ output Gain to ______ Loss to ______ | Effective price floor Generates surplus output Gain to farmers Loss to consumers |
| The government will end up buying the farms' surplus to maintain the prices. This means that they will harm consumers by using tax dollars to _____ the change | subsidize |
| Reduction of surpluses: Restrict supply with a____ a______ Strengthen _____ Make surpluses ______ without ____ ___ of them | acreage allotments demand smaller; getting rid |
| Criticisms and Politics: Criticisms of ____ _____ Criticisms of Price Supports: _____, not causes misguided _______ | Parity Concept Symptoms, not causes Misguided subsidies |
| Recent Farm Policies: ______ to ____ Act of 1996: Tried to get farmer's off of _____ _____ ** The Food, Conservation, and Energy Act of 2008: Direct ______ __________ payments (CCP) M____ _____ programs | Freedom to Farm Act off of price supports Direct payments Countercyclical payments (CCPs) Marketing loan program |
| Countercyclical payments (CCPs): payments made to fill the gap between the _____ price of the farm product and the actual _____ _____ of the current year | target price actual market price |
| Agricultural Act of 2014: Crop ______ P_____ ____ coverage Agricultural ___ coverage Agricultural Act of 2018 | Crop insurance Price loss coverage Agricultural risk coverage |
| The major source of demand volatility in U.S. agriculture springs from its dependence on _____ _____ | world markets |
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Phillies55
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