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Homework answers / question archive / 1) Individual farmers cannot individually affect market price because a) There is an infinite demand for their goods
1) Individual farmers cannot individually affect market price because
a) There is an infinite demand for their goods. b) Demand is perfectly inelastic for the farmer's produce. c)Their individual production is insignificant relative to the production of the market. d)The government exercises control over the market power of competitive firms.
2. Compared to the early 1950s, today farm output per labor-hour is
a) 10 times greater than it was then.
b) The same as it was then.
c) 20 times greater than it was then.
d) 20 percent less than it was then.
3. Because farm products have a low elasticity of demand, a small change in farm output will have
a) An indeterminate effect on price.
b) No effect on price.
c) A smaller effect on price.
d) A larger effect on price.
4. The price elasticity of demand for food is
a) Perfectly inelastic.
b) Relatively inelastic.
c) Relatively elastic.
d) Perfectly elastic.
5. In order to continue earning an economic profit, individual farmers must
a) Expand their rate of output until marginal cost equals zero.
b) Charge higher prices than their competitors.
c) Continue to improve their productivity.
d) Charge lower prices than their competitors.
6. If a price support is maintained above the equilibrium price, the result will be a
a) Market price that is too low.
b) Market price equal to the equilibrium price.
c) Surplus of the product.
d) Shortage of the product.
7. The primary focus of U.S. farm policy has been
a) Subsidies.
b) Price supports.
c) Low-interest loans.
d) Tax credits for mechanical equipment.
1. c) Their individual production is insignificant relative to the production of the market
Since there are many farmers supplying their products to the market, it becomes difficult for an individual farmer to influence the prevailing price in the market. For instance, if a farmer increases the price of goods, he or she will lose clients to other suppliers. However, if farmers come together and form a monopoly, then they'll influence the price.
2. a) 10 times greater than it was then
With the improvement in the technological realm, it can be argued that farm output per-labor-hour has increased significantly. For example, today machines are being used for planting and harvesting.
3. c) A smaller effect on the price
Since a large change in price for farm products causes a small variation in demand, when farmers make a small change in output, there's going to be a smaller impact on the price.
4. b) Relatively inelastic
This means that fairly large variations in price lead to moderately small fluctuation in the quantity purchased.
5. c) Continue to improve their productivity
When the farmers enhance their productivity, the cost of farming will drop. Therefore, they'll continue to make profits.
6. c) The surplus of the product
High prices will encourage the producers to supply more goods to the market than what is demanded. Therefore, there's going to be a surplus in the market.
7. b) Price supports
Price supports are meant to cushion the farmers when the market price is low compared to the cost of production. The U.S government provides price support for some dairy commodities and crops though deficiency payment when the market price is low.
