II True/False

For each question circle T (True) or F (False).

T F 1. California uses a milk quota, which limits the production response to its policy of price discrimination and pooling.

T F 2. In the 1950s and early 1960s the U.S. tobacco program caused increases in yields over time, eventually leading to a change in policy

T F 3. The 2004 U.S. tobacco program buyout overcompensated tobacco quota owners

T F 4. The United States has a comparative advantage relative to Mexico in sugar production.

T F 5. The EU wheat policy evolved partly in response to the U.S. wheat policy, and vice versa.

T F 6. U.S. sugar policy benefits U.S. sugar producers but imposes costs on U.S. sugar consumers and U.S. corn growers.

T F 7. Without government subsidies U.S. crop insurance would cease to exist.

T F 8. Subsidized crop insurance yields net social benefits because it reduces market failures associated with excessive instability of prices, yields and farm incomes.

T F 9. The shift from an emphasis on decoupled payments to crop insurance has reduced the taxpayer cost of farm income support in the United States.

T F 10. Whole farm income support policies are less distortionary compared with direct payments that are based on the history of production of particular commodities (i.e., fixed program yield and acreage, with no updating).