Ag Econ 356 (Test 1A)

T or F? A Pareto optimal outcome is when the benefits to the winners outweigh the costs to the losers

False, Pareto optimal is when no one can be made better off without making someone else worse off.

T or F? Pareto optimality is when society is only made better when the person or group which is least well off is made better off

False, That is Rawlsian

T or F? A valid argument is defined as an argument where all the premises are agreed upon to be true

False, This is a sound argument

T of F? All else equal, if a market exhibits inelastic supply the producer surplus will be lower than if the market exhibits elastic supply

False, for a perfectly elastic supply there is no producer surplus

T or F? The price elasticity of demand is always positive.

False, is always negative

Which of the following reflect minority politics principles? A-Farm and environmental cluster support for the farm bill. B-Farm organization support for Republicans. C-Farm organization opposition to food stamps. D-All of the above. E-None of the above.

A-Farm and environmental cluster support for the farm bill.

The price elasticity of supply: A-Is always positive B-May be positive or negative C-Is positive in developed countries but negative in developing countries. D-Is positive in developed countries but may be positive or negative in developing countries. E-B and D above

A-Is always positive

If the absolute value of the own price elasticity of demand for a good is less than one then: A-A 1% change in price will yield a greater than 1% change in the quantity demanded. B-A 1% change in price will yield a less than 1% change in the quantity demanded. C-A 1% change in price will not change quantity demanded at all. D-A 1% change in price will yield exactly a 1% change in the quantity demanded. E-None of the above

B-A 1% change in price will yield a less than 1% change in the quantity demanded

Another name for the demand curve is? A-Supply curve B-Consumer's marginal benefit curve C-Consumer's marginal cost curve D-Producer's willingness to accept curve E-None of the above

B-Consumer's marginal benefit

Which of the following is not an example of violation of the assumption of free market Pareto optimality? A-Environmental externalities B-Public Goods C-A local food business failing because of insufficient demand D-Goods which are non-rival and non-excludable. E-None of the above

C-A local food business failing

Regarding the steps in the policy process, which of the following is NOT true: A-The policy process involves both positive and normative statements. B-Facts are verifiable. C-Differences in values across groups are irrelevant to the policy process. D-Value judgements are based on ethical considerations. E-All are true

C-Differences in values across groups are irrelevant to the policy process

In the long run, the benefits of farm programs A-Only go to large landowners who do not need them. B-Lead to high farm prices. C-Get capitalized into the value of fixed assets such as land. D-Go primarily to consumers. E-Go primary to small farmers

C-Get capitalized into the value of fixed assets such as land.

A Rawlsian social welfare function: A-Weights gain to poor people slightly higher than gains to rich people B-Weights gains to poor people equally to gains to rich people. C-Only make society better off when the worst off person's conditions is improved. D-Only takes into account the total surpluses across all individuals. E-C and D above.

C-Only make society better off when the worst off person's conditions is improved.

Economics: A-Involves the allocation of scare resource among unlimited wants and desires. B-Price does the allocating C-Makes it possible to objectively decide what policy should be. D-Can be used to destroy myths E-A,B, and D above

E-A,B and D above

Which of the following is NOT a traditional argument for the need for specific agricultural policy? A-Agriculture markets are particularly instable. B-Increased globalization in agricultural markets. C-Human health and food security issues. D-The complex interaction of agricultural production and environmental issues. E-All are true

E-All are true

T of F? If all costs of production and benefits of consumption of a given good are reflected in the market price there is no market outcomes are Pareto optimal

True

T of F? Positive analysis focuses on what is and normative analysis focuses on that should be.

True

T or F? An assumption of free market optimality is that the marginal private benefit of consuming a good must equal the marginal social benefit of that consumption and the marginal private cost of producing a good must equal the marginal social cost.

True

T or F? In doing social benefit cost analysis, decisions must be made by evaluating alternatives including to "do nothing" or status quo alternative

True

T or F? Some form of capitalization is typically a consequence of government effort to increase or stabilize farm income

True