Chapter 19: Agriculture: Economics and Policy

Wheat, soybeans, cattle, rice, etc.

Items sold through restaurants or grocery stores

Demand for ________ has increased slowly, because it is inelastic with respect to income.

Large corporate farming firms

Year after year for a fixed output of farm products, a farmer should be able to acquire a specific total amount of other goods and services; relationship between the prices received by farmers for their output and the prices they must pay for goods and services should remain constant

Ratio of prices received to prices paid, expressed as a percentage

Gov’t price floors on farm products

In return for guaranteed prices for their crops, farmers had to agree to limit the number of acres they planted in that crop

Ended price supports and acreage allotments for wheat, corn, barley, oats, sorghum, rye, cotton, and rice

Current subsidy programs continue the “freedom to plant” and “direct payment” approaches to farm policy but make direct payments permanent and provide revenue protection for farmers. The revenue guarantees kick in automatically when crop prices (or total revenues) fall below targeted levels

Cash payments are fixed for each crop based on a farmer’s historical pattern of production and are unaffected by current crop prices or current production

Based on previous crops grown and are received regardless of the current crop planted

Farmers can receive a loan (on a per-unit-of-output basis) from a government lender