Sample Questions and Answers
Which of the following is an example of “opportunity cost” in agricultural production?
A) The direct cost of fertilizer used in crop production
B) The income lost from choosing to grow one crop instead of another more profitable crop
C) The price consumers are willing to pay for agricultural products
D) The government subsidies given to farmers to support their income
Answer: B
Which of the following would be classified as a “non-tariff barrier” to agricultural trade?
A) Import quotas on agricultural products
B) A tax on foreign agricultural imports
C) A subsidy for domestic agricultural producers
D) A price floor set for domestic agricultural goods
Answer: A
In the context of agricultural policy, a “target price” refers to:
A) The price set by the government to ensure that agricultural producers receive a fair price for their products
B) The market price at which agricultural products are sold to consumers
C) The price at which foreign agricultural goods are allowed to enter the domestic market
D) The price consumers are willing to pay for agricultural goods in a competitive market
Answer: A
Which of the following is an example of “differential pricing” in agricultural markets?
A) Charging different prices for the same agricultural product based on regional demand
B) Setting the same price for agricultural goods across all markets
C) Offering a subsidy to reduce the price of agricultural goods in domestic markets
D) Charging the same price for agricultural goods regardless of production costs
Answer: A
Which of the following best describes a “monopsony” in the context of agricultural markets?
A) A market where many producers compete to sell the same agricultural product
B) A market where there is only one buyer of agricultural products, creating a market power imbalance
C) A market where the government controls the production and pricing of agricultural goods
D) A market where the agricultural product is a public good
Answer: B
Which of the following is an example of a “negative externality” in agriculture?
A) The pollution caused by the use of pesticides in crop production
B) The technological advancements that increase agricultural productivity
C) The increase in consumer welfare due to lower food prices
D) The positive environmental impact of sustainable farming practices
Answer: A
What is the primary goal of “agricultural supply chain management”?
A) To maximize government revenue through agricultural exports
B) To efficiently manage the flow of agricultural products from producers to consumers
C) To increase agricultural subsidies for producers
D) To set international agricultural trade tariffs
Answer: B
In the context of agricultural international trade, “tariffs” are used primarily to:
A) Encourage the import of agricultural products by lowering their cost
B) Protect domestic agricultural producers from foreign competition by increasing the cost of imports
C) Increase the total supply of agricultural goods available in the market
D) Facilitate the free movement of agricultural goods between countries
Answer: B
Which of the following would be most likely to increase the “price elasticity of demand” for agricultural products?
A) The availability of close substitutes for the agricultural product
B) A decrease in the income level of consumers
C) A reduction in the number of producers in the agricultural market
D) A decrease in consumer preferences for the product
Answer: A
Which of the following is a characteristic of a “perfectly competitive” agricultural market?
A) A few large firms dominate the market and control prices
B) Producers sell differentiated products and compete based on branding
C) There are many small producers offering homogeneous products with no barriers to entry
D) The government sets the prices for agricultural goods in the market
Answer: C
Which of the following is an example of “market failure” in the context of agricultural economics?
A) The production of goods in a perfectly competitive market
B) The overproduction of agricultural goods due to government subsidies
C) The government regulation of agricultural prices to ensure fairness
D) The increase in agricultural productivity due to technological improvements
Answer: B
Which of the following best describes “consumer surplus” in an agricultural market?
A) The difference between the total revenue producers receive from selling agricultural goods and their total cost of production
B) The difference between what consumers are willing to pay for a product and what they actually pay
C) The total amount of government subsidies given to agricultural producers
D) The amount of tax revenue collected from the sale of agricultural goods
Answer: B
Which of the following is a key assumption of the “Ricardian model” of comparative advantage?
A) All countries have the same resource endowments and technological capabilities
B) Countries should specialize in producing goods for which they have the highest absolute advantage
C) Countries should specialize in goods they can produce at the lowest opportunity cost
D) Governments should impose tariffs to protect domestic industries from foreign competition
Answer: C
Which of the following is most likely to cause a “shift to the left” in the demand curve for an agricultural product?
A) An increase in consumer incomes
B) A decrease in the price of related goods
C) A decrease in consumer preferences for the product
D) An increase in the price of the product
Answer: C
Which of the following is true regarding the “input-output model” in agricultural economics?
A) It primarily focuses on the relationship between input prices and output levels in agricultural production
B) It shows how changes in one sector of the economy can affect other sectors through inter-industry linkages
C) It examines consumer preferences and how they impact agricultural demand
D) It focuses exclusively on international trade relations and tariffs in agriculture
Answer: B
In agricultural policy, a “subsidy” is typically provided to:
A) Discourage production of certain agricultural goods
B) Ensure that agricultural producers receive an income that is above market equilibrium prices
C) Lower consumer prices for agricultural products
D) Protect consumers from price volatility in agricultural markets
Answer: B
Which of the following is an example of “consumer surplus” in an agricultural market?
A) The total amount spent by consumers on agricultural products
B) The difference between what consumers are willing to pay and what they actually pay for agricultural goods
C) The total revenue earned by agricultural producers
D) The difference between the cost of production and the market price of agricultural goods
Answer: B
Which of the following is a characteristic of “monopolistic competition” in agricultural markets?
A) A single firm controls the market and dictates prices
B) Many producers sell differentiated agricultural products and compete based on non-price factors such as branding
C) There are a few large firms that control the market and price competition is minimal
D) There are no barriers to entry, and firms produce identical agricultural goods
Answer: B
Which of the following factors is most likely to increase “price elasticity of demand” for agricultural products?
A) A decrease in the number of substitute goods available
B) A decrease in the income level of consumers
C) The product is considered a necessity
D) The product has many available substitutes
Answer: D
The “Pareto optimal” point in agricultural economics occurs when:
A) Total agricultural output is maximized
B) It is impossible to make one individual better off without making someone else worse off
C) The price of agricultural products is equal to the marginal cost of production
D) Government intervention causes equal benefit to all consumers and producers
Answer: B
In the context of agricultural economics, a “negative externality” occurs when:
A) Producers benefit from increased output without affecting other parties
B) Government subsidies encourage more efficient use of agricultural inputs
C) The costs of production or consumption spill over onto third parties who are not involved in the transaction
D) The market for agricultural goods functions without any intervention
Answer: C
Which of the following is an example of “supply-side economics” in the agricultural sector?
A) Providing income support to low-income consumers to stimulate demand for agricultural products
B) Imposing price floors to protect domestic producers from falling prices
C) Reducing subsidies to encourage efficiency and competition in agricultural production
D) Increasing tariffs on imported agricultural goods to protect domestic farmers
Answer: C
Which of the following best defines “welfare economics” in the context of agricultural markets?
A) The study of income redistribution in the agricultural sector
B) The evaluation of policies to ensure the efficient allocation of resources in agricultural markets
C) The analysis of how government intervention affects market prices for agricultural products
D) The study of income inequality between agricultural producers and consumers
Answer: B
Which of the following best describes the concept of “comparative advantage” in international trade?
A) Countries should produce goods for which they have the lowest absolute costs compared to other countries
B) Countries should produce goods that require the least amount of land and labor resources
C) Countries should specialize in the production of goods for which they have the lowest opportunity cost relative to other countries
D) Countries should produce a diverse range of goods to meet domestic demand
Answer: C
Which of the following is the primary focus of “benefit-cost analysis” in agricultural economics?
A) To assess the potential economic profits from exporting agricultural products
B) To evaluate the trade-offs between the costs of production and the benefits gained from the agricultural products
C) To measure the direct cost savings from reducing agricultural subsidies
D) To determine the minimum price at which agricultural goods should be sold
Answer: B
Which of the following is the most likely impact of a “tariff” on agricultural imports?
A) It increases the quantity of agricultural products imported from other countries
B) It decreases the price of agricultural products for domestic consumers
C) It protects domestic agricultural producers from foreign competition by making imported goods more expensive
D) It encourages international cooperation among countries for free trade
Answer: C
In agricultural economics, “differential pricing” refers to:
A) Setting different prices for the same agricultural product in different geographic markets based on demand
B) Charging the same price for agricultural products regardless of production costs
C) A pricing strategy used by monopoly agricultural producers to maximize profits
D) Establishing a uniform price across all agricultural products to ensure market stability
Answer: A
Which of the following is most likely to result from a “quota” on agricultural imports?
A) An increase in the domestic supply of agricultural goods
B) A reduction in the price of imported agricultural products
C) A limitation on the quantity of agricultural goods that can be imported into the country
D) A greater variety of agricultural products available to consumers
Answer: C
Which of the following describes a “public good” in agricultural economics?
A) A good that is rivalrous and excludable, like most agricultural products
B) A good that can be consumed by one individual without reducing its availability to others
C) A good that is not produced by private firms due to the lack of profitability
D) A good that has high demand but is only produced in limited quantities
Answer: B
Which of the following best defines “marginal benefit” in the context of agricultural economics?
A) The additional cost incurred by producing one more unit of an agricultural good
B) The total benefit derived from producing and selling agricultural goods
C) The additional satisfaction or value gained from consuming one more unit of an agricultural product
D) The price at which agricultural goods are sold to consumers
Answer: C
Which of the following is most likely to result in an “increase in demand” for agricultural products?
A) An increase in the price of complementary goods
B) A decrease in consumer incomes
C) A reduction in consumer preferences for the agricultural product
D) A change in consumer tastes that increases the popularity of the agricultural product
Answer: D
In terms of agricultural policy, “market-based approaches” to addressing environmental externalities typically:
A) Use taxes, subsidies, or cap-and-trade systems to encourage producers to internalize the cost of environmental damage
B) Set strict quotas on the amount of environmental damage allowed in agricultural production
C) Provide government grants to compensate farmers for environmental damage caused by agricultural activities
D) Focus on price controls to reduce production levels and decrease environmental harm
Answer: A
Which of the following is a primary focus of “input-output analysis” in agricultural economics?
A) Examining the direct and indirect relationships between inputs used in agricultural production and outputs produced
B) Determining the ideal production technology for each type of agricultural product
C) Calculating the marginal costs and marginal benefits of agricultural goods
D) Identifying the price elasticity of demand for agricultural products
Answer: A
Which of the following best explains the concept of “elasticity” in agricultural economics?
A) The responsiveness of the quantity demanded or supplied to changes in price
B) The ability of agricultural producers to adjust production levels based on government price floors
C) The relationship between agricultural output and the labor force employed in production
D) The ability of consumers to substitute one agricultural product for another
Answer: A
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