Free CIMAPRA17-BA1-1 Exam Braindumps (page: 40)

Page 40 of 118

Which ONE of the following circumstances is essential if producer incomes are to rise following the imposition of a price floor (minimum price) in a market?

  1. Market supply is price inelastic
  2. Market demand is price inelastic
  3. Market supply is price elastic
  4. Market demand is price elastic

Answer(s): B



Which of the following sets of conditions will lead to greater stability (or convergence) of prices in the Cobweb model (or Cobweb theorem)?

  1. Price elastic demand, price inelastic supply
  2. Price inelastic demand, price elastic supply
  3. Price elastic demand, price elastic supply
  4. Price inelastic demand, price inelastic supply

Answer(s): A



In 201X the market for a crop suffered high prices. According to cobweb theory what was likely to have happened in the following year?

  1. Price will stay high as farmers restrict supply to make extra profits
  2. Price will fall because the high price in 201X gave an incentive to farmers to plant more and flood the market with extra supply
  3. Price will fall as consumers find cheaper substitutes to the high-priced crop
  4. Price will rise further as buyers stockpile the new harvest to avoid suffering higher prices for a second year

Answer(s): B



All of the following factors contribute to the instability of agricultural prices except which ONE?

  1. Agricultural products have low price elasticities of supply
  2. Output is affected by non-controllable factors such as climate
  3. Supply decisions are based on the prices of the present time period D. Markets have a low price elasticity of demand

Answer(s): C



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