Answer the following statements true (T) or false (F)
1. The price elasticity of demand for most agricultural products is relatively low.
2. The increasing relative importance of agricultural exports has increased the instability of the demand for U.S. farm products.
3. An increase in the supply of farm products relative to the demand for them tends to cause farm incomes to decline.
4. Due to high fixed costs relative to variable costs in farming, farm production is quite sensitive to price-changes in the short run.
5. Technological advances have occurred throughout the history of agriculture, resulting in higher productivity but lower incomes to farmers.
1. T
2. T
3. T
4. F
5. T
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(a) Domestic household expenditure (C). (b) Exports (X). (c) Investment (I). (d) The net expenditure of central and local government (G).
A mixed economy
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A) The product price will instantaneously adjust downward. B) Product prices do not change in this situation. C) Producers will decrease the product price. D) A new, higher price is not instantaneously achieved, but the price will rise over time.