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Agribusiness Production Economics Question Paper
Agribusiness Production Economics
Course:Bachelor Of Science In Agriculture
Institution: Pwani University question papers
Exam Year:2011
UNIVERSITY EXAMINATIONS 2010/2011
ACADEMIC YEAR 2ND YEAR 1ST SEMESTER
EXAMINATION FOR THE DEGREE OF BACHELOR OF SCIENCE IN AGRICULTURE AND ENTERPRISE DEVELOPMENT
ABT 201:
AGRIBUSINESS PRODUCTION ECONOMICS
(EL) INSTRUCTIONS
1. Answer Question ONE(1) and any other three(3) from questions provided. 2. Marks are indicated in brackets ( ) provided 3. Total marks are 70 marks Question 1 a) i) Differentiate between Economics and Agricultural Economics. (2 marks) ii) Explain the “endless cycle of production and consumption” (2 marks) b) Production at Juma’s farm shows the following relationship between the number of workers and the Quantity of out put of maize cob per shelled per day (kg).
Quantity of Variable input Labour
Quantity of output from farm (maize cobs) (kg)
Marginal Return to Additional labour
Fixed Cost (Ksh)
Variable Cost (Ksh)
Total Cost (Ksh)
0 1 2 3
0 100 180 240
-
2
i) Calculate the marginal return gained from the addition of each
work, filling in the column in the table. (1 ½ marks)
ii) Suppose Juma leases the farm at a cost of Ksh.50/= per day. Fill
the fixed cost column in the table. ( 1 ½ marks)
iii) Suppose Juma Pays worker hired at Ksh.80 per day and this is the
only variable cost. Fill in the variable cost column in the table.
( 1 ½ marks)
iv) Fill in the column for the total cost corresponding to each level of
production. (1 ½ marks)
c) i) What is the concept of elasticity of supply (use illustration in your
explanation) (4 marks)
ii) How is elasticity of supply measured? (2 marks)
iii) Briefly explain the factors that elasticity of supply depends upon.
(5 marks)
iv) What is income elasticity of demand? (2 marks)
iv) Compute the income elasticity of demand from the information on
the accompanying diagram and explain what the coefficient means.
(Assume Do corresponds to a Ksh.20,000 annual income and D1 to
Ksh24,000) (4 marks)
Price
D1
Do
Ksh.10
0
60 75
Quantity
d) Using an Isocost-isoquant diagram, illustrate the cost
- minimizing mix of inputs for a given level of output
(5 marks)
Q.2) a) Illustrate with a diagram the three stages of production using the
TPP,MPP and APP curves (write short notes on every stage of
production) (10 marks)
3
b) What is the Profit – maximizing rule? (show with a diagram to
support your explanation). (5 marks) c) What is the relationship between the MPP and MC Curves? Why are they so related? (show with a diagram to support your explanation) (5 marks) Q.3) a) With an illustration show how the supply curve shift from one position to another. (Include the explanation behind this phenomena) (6 marks)
b) Explain fully the five(5) major factors that can shift supply of most
products. (5 marks)
c) Explain in full cross elasticity of supply why is the cross elasticity
coefficient can be negative or positive. (5 marks)
d) Compute the elasticity of supply from the following data.
Price Quantity Supplied
Initial situation $ 10 1000 New situation $ 15 2000
What does the elasticity coefficient mean? (4 marks) Q.4) i) a) What is a perfectly competitive firm? (2 marks) b) What are the two characteristics that give rise to such a perfectly competitive farm. (4 marks) c) What industry comes closest to Perfect competition? (1 mark) ii) a) Distinguish between the demand by consumers for a product produced by a perfectly competitive firm and the demand facing such a firm. (4 marks) b) What is the shape of the demand curve facing a perfectly competitive firm? (illustrate with a diagram) (2 marks)
c) What is implied by such a demand curve above (b) (1 mark).
iii) a) What is imperfectly competitive firm? (2 marks) b) What are the two characteristics that result in such a imperfectly competitive firm . (4 marks)
4
Q.5) a) Using the appropriate diagram, illustrate and explain the profit - maximizing price and quantity for an oligopoly. (7 marks) b) i) What are the two characteristics that cause monopolistic competition? (4 marks) ii) Give some examples of monopolistically competitive firms. (2 marks) iii) Mention the characteristic of monopolistic (1 mark) competition that is similar to perfect competition. c) i) What is the law of diminishing marginal utility? (1 mark) ii) What are indifference curves (2 marks) iii) Briefly state the properties of indifference curves. (3 marks)
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