Vincennes University AGBS 434 Chapter 2 1)The effects of the fallacy of composition and capitalization mean that both the short and long run consequence of policy must be analyzed before a policy decision is made     The price elasticity of demand is always negative

Vincennes University

AGBS 434

Chapter 2

1)The effects of the fallacy of composition and capitalization mean that both the short and long run consequence of policy must be analyzed before a policy decision is made

2. The price elasticity of demand is always negative.

3. History indicates that farmers have readily given up their economic freedom for subsidies

4. Food programs are primarily the responsibility of HHS

5. Capitalization is always a consequence of government efforts to increase or stabilize farm income

6. The demand for individual foods is more price elastic than for all food

7. History demonstrates that when a large budget deficit is run for several years, steps are taken to reduce government spending

8. Farmers inevitably lose support for farm subsidies when government reduces spending

9. Economists have the tools to judge economic questions on the basis of ethical or political criteria

10. As incomes of the general population have increased, farmers have been expected to satisfy more public concerns

11. A market failure involves the failure of markets to operate in the interest of society

12. The USDA shares its food safety mission with HHS

13. Environmental externalities are external to agriculture

14. Tenants seldom benefit from capitalization

15. More of the USDA budget is typically spend on farm programs than food programs

16. The economic justice argument applies more to farm programs than to food programs

17. Self-sufficiency is a more important factor influencing farm policy in the United States than in Europe

18. The price elasticity of demand is always negative

19. Farmers are uniformly conservative on policy issues

20. The main thrust of USDA environmental programs has been to regulate externalities

21. The demand for both all food and individual foods is typically price elastic.

22. The export demand price elasticity is more elastic than domestic demand.

23. Capitalism illustrates the fallacy of composition

24. Export demand is typically more inelastic than the domestic demand for the same commodity

25. Economists have tools to objectively judge which policy is best without value judgments

26. Crop insurance is a green box subsidy.