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Ag Eco Exam 2! > Old Test Questions > Flashcards

Old Test Questions Flashcards

1
Q

What is one main reason for the reduction in the supply of farmworkers?

A

Increased internal immigration enforcement.

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1
Q

What is the H-2A program?

A

A program that allows employers to bring foreign workers to work on U.S. farms in compliance with immigration law

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2
Q

What lesson can be learned from the government’s intervention in the cheese market?

A

Balancing social and economic goals is a challenging task

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3
Q

What was one of the challenges faced by the government when buying and storing cheese?

A

The perishable nature of milk and cheese

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4
Q

From 2018 to 2020, there were roughly 21,000 H-2A positions certified in North Carolina.

A

True

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5
Q

The policy described in the “Big Government Cheese” podcast is what kind of price control?

A

Price Floor

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6
Q

Sweet potatoes, Christmas trees, and flue-cured tobacco are all labor-intensive and require a consistent farm labor.

A

True

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7
Q

True or false? An effective price control is one that successfully improves the welfare of producers and consumers.

A

False

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8
Q

True or false? Binding price controls are also known as effective price controls.

A

True

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9
Q

Your friend is worried because the government has just enacted a price ceiling on gas of $5 per gallon. She says the DWL will be astronomical with this new policy. What do you tell her based on NC’s current regular gas prices (look this up if you need to)?

A

You tell her not to worry because the price ceiling is above the equilibrium price, so the deadweight loss will be zero.

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10
Q

What has been the general trend of agricultural labor availability in the United States in recent years?

A

It has diminished considerably.

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11
Q

What was the main change introduced by the Immigration Reform and Control Act of 1986 regarding the H-2 visa category?

A

It split the H-2 visa into H-2A (for agriculture) and H-2B (for non-agricultural work).

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12
Q

According to the article, which sector is competing for workers previously employed in agriculture in North Carolina?

A

Construction sector

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13
Q

What is the main purpose of the Adverse Effect Wage Rate (AEWR) in the context of the H-2A visa program?

A

To ensure that employing an H-2A guest worker will not negatively affect the wages of similarly qualified individuals employed in related jobs

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14
Q

Suppose that a binding price floor is in place in a particular market. If the market is deregulated and the price floor is removed:

A

the quanity of the good supplied will decrease.

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15
Q

The total consumer surplus for good X can be calculated in all ways EXCEPT as:

A

the area bounded by the demand curve for X and the two axes.

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16
Q

What is the difference between a shortage and scarcity?

A

Scarcity will almost always exist, but a shortage will exist only if the price is kept below the equilibrium level.

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17
Q

An agricultural market price support policy establishes a binding price floor, which:

A

increases the price received by farmers.

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18
Q

If the minimum wage is a binding price floor:

A

those who want to work will outnumber the jobs available

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19
Q

If the supply curve of ice cream is upward-sloping and demand for it decreases, there will be _____ in producer surplus.

A

a decrease

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20
Q

If there is a decrease in supply, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

A

will decrease.

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21
Q

Due to price supports, the minimum price of dairy is above equilibrium. Deadweight loss occurs. Why?

A

The price of dairy is pushed above the willingness to pay for some consumers. These consumers no longer buy from willing sellers, so transactions are cancelled.

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22
Q

Suppose quantity supplied equals quantity demanded at $14. Choose an effective price control.

A

Price ceiling of $8

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23
Q

The policy described in the “Big Government Cheese” podcast is what kind of price control?

A

Price floor

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24
Q

True or false? An effective price control is one that successfully improves the welfare of producers and consumers.

A

False

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25
Q

True or false? Binding price controls are also known as effective price controls.

A

True

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26
Q

Which welfare measure increases due to a binding price floor?

A

Producer Surplus.

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27
Q

A restaurant manager has estimated that the price elasticity of demand for meals is 2. If the restaurant increases menu prices by 5%, she can expect the number of meals sold to decrease by _____ and total revenue to _____.

A

10%; fall

28
Q

For a normal demand curve, the price elasticity of demand will be:

A

Always negative

29
Q

Goods are _____ when the cross-price elasticity of demand is positive and _____ when the cross-price elasticity of demand is negative.

A

substitutes; complements

30
Q

If quantity supplied responds substantially to a relatively small change in price, supply is:

A

price-elastic

31
Q

If the income elasticity of demand for a good is negative, the good is said to be:

A

inferior

32
Q

If the price of a good increases by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to:

A

0.75

33
Q

The government imposes an excise tax on fuel. The fuel tax incidence takes place within a market where the price elasticity of supply of fuel is 0 and the price elasticity of demand for fuel is infinite. The excise tax is paid by the

A

Producers of fuel

34
Q

The demand for alcohol is highly inelastic. This suggests that the incidence of a higher tax on alcohol will fall primarily on

A

Alcohol Consumers

35
Q

You read a news article that says “Research Unveils Consumer’s Shifting Purchasing Habits of Eggs in Response to Price Increases”. What elasticity concept does this describe? Use the acronym only (PED, CPE, IED, PES, etc.).

A

PED

36
Q

“And the way that economists measure this market power is by looking at how consumers… behave when prices change. It’s basically a kind of competition between how responsive are…consumers to the changing prices.” The quote above can be best described by which concept in our unit?

A

Price elasticity of demand

37
Q

According to the podcast, consumers have traditionally taken on most of the gas tax burden when taxes have been increased. Why

A

Demand for gas is more inelastic than the supply of gas.

38
Q

Demand for gas is price _____ in the short-run. Why?

A

inelastic; consumers cannot stop buying gas after a price increase because they must commute to work, school, and other obligations.

39
Q

Supply of gas is price _____ in the short-run.

A

Inelastic

40
Q

Which of the following statements about tax incidence are true?

A

Tax incidence depends on who has market power.

c.
Tax incidence tells us who will pay the largest share of the tax, in this case, consumers or oil companies.

d.
Tax incidence describes how a tax burden is shared between different groups.

41
Q

An important determinant of the price elasticity of demand is the:

A

proportion of the household budget spent on the good.

42
Q

If a good is a necessity with few substitutes, all others things equal, then demand will tend to:

A

Be less price-elastic

43
Q

If the demand for golf is price-inelastic and your local public golf course increases the greens fees for using the course, you expect:

A

an increase in total revenue received by the course.

44
Q

Sonik, a wireless phone company, tested the effect of a price reduction for text messaging. It lowered prices from $0.08 to $0.04 per message and found that the number of messages sent tripled. This means:

A

the demand for text messaging is elastic in this price range.

45
Q

Suppose at $10 the quantity demanded is 100. When the price falls to $8, the quantity demanded increases to 130. The price elasticity of demand between $10 and $8, by the midpoint method, is approximately:

A

1.17

46
Q

Suppose that an increase in the price of a good leads to an increase in total revenue. Ignoring other factors (like supply), at its current price the good must be:

A

Price-inelastic

47
Q

Suppose the price elasticity of demand for cheeseburgers equals 0.37. This means the overall demand for cheeseburgers is:

A

Price Inelastic

48
Q

Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%. We know that the:

A

cross-price elasticity between cereal and milk is –2

49
Q

The Cozy Chair Company believes it can sell 200 chairs at $200 per chair or 300 chairs at $150 per chair. Using the midpoint formula, what do they think is the price elasticity of demand?

A

1.4

50
Q

The cross-price elasticity of electricity with respect to the price of natural gas has been estimated as being equal to 0.2. This implies that:

A

electricity and natural gas are substitutes.

51
Q

The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will have _____ prices, _____ quantities sold, and _____ incomes.

A

Lower; greater; lower

52
Q

The income elasticity of demand for eggs has been estimated to be 0.57. If income grows by 5% in a period, all other things unchanged, demand will:

A

Increase by about 2.9%

53
Q

The long-run price elasticity of supply of crude oil is _____ the short-run price elasticity of supply of crude oil.

A

Greater than

54
Q

The price elasticity of demand along a demand curve with a constant slope:

A

decreases in absolute value as quantity demanded rises

55
Q

The price elasticity of demand measures the responsiveness of the change in the:

A

quantity demanded to a change in the price.

56
Q

When the price of chocolate-covered peanuts decreases from $1.10 to $0.95, the quantity demanded increases from 190 bags to 215 bags. If the price is $1.10, total revenue is _____, and if the price is $0.95, total revenue is _____.

A

$209; $204.25

57
Q

Which of the following is most likely to have a vertical supply curve?

A

Paintaings by Van gogh.

58
Q

Which of the following is NOT a factor in determining the price elasticity of demand?

A

The slope of the supply curve

59
Q

Yovanka has diabetes, and she will pay any amount of money for insulin. What is likely the best characterization of Yovanka’s demand for insulin?

A

Perfectly price inelastic.

60
Q

Suppose the input prices for Good X fall. Total revenue also fell. What must have happened?

A

Supply increased, causing prices to fall. The supply curve must have shifted right to an inelastic part of the demand curve. Consumers were not very responsive to the price decrease. The price fell by more than the increase in quantity demanded.

61
Q

The federal gas tax is __ cents per gallon.

A

18

62
Q

The podcast relates most closely to which concept in this unit?

A

Tax Incidence

63
Q

The short-run price elasticity of supply for gasoline in the United States is:

A

Highly inelastic

64
Q

Which of the following contribute to the price consumers pay for gas according to the podcast?

A

a.
Distribution and marketing

b.
The price of crude oil

c.
State taxes

d.
Federal taxes

65
Q

Which part of the linear demand curve is inelastic?

A

Bottom

66
Q

“In Florida, rising menu prices for UberEats and GrubHub have pumped up demand for Door Dash.” What elasticity concept is most relevant to this excerpt?

A

This describes CPE and Uber and GrubHub are substitutes.

67
Q

You are given the following information: the PED of X is -2, the CPE between X and Y is -3, PES = 1, and IED of Good X is 4. If the price of good X increases by 5%, select the statements that are true.

A

Good X is a normal good

If the price of Good Y increases by 5%, the quantity demanded of Good X will decrease 15%.

68
Q
A

Ag Eco Exam 2! (4 decks)

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