Kbt 100:Principles Of Agribusiness Economics Question Paper

Kbt 100:Principles Of Agribusiness Economics

Course:Bachelor Of Science In Agribusiness Management

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
SCIENCE (AGRIBUSINESS MANAGEMENT AND TRADE)
KBT 100: PRINCIPLES OF AGRIBUSINESS ECONOMICS
DATE: MONDAY, 22ND NOVEMBER 2010

TIME: 8.00 A.M. 10.00 A.M.

INSTRUCTIONS: Answer Question 1 and any other 2 questions.

1.
(a) What are the conditions necessary for a monopolist to practice price

discrimination? (4 marks)

(b) Under what conditions would a monopolistic market be considered

desirable? (3 marks)

(c) How do expected future prices affect the supply of food commodities

in a country? (4 marks)

(d) Define the following economic terms, giving suitable examples from
agribusiness economics.

(i) Monopsony (2 marks)
(ii) Management (2 marks)

(iii) Economies of scope(2 marks)

(e) State whether true or false and explain briefly

(i) A rural access road is NOT an example of capital as a factor of production.

(ii) If the prices of apples increased, there will be excess supply of apples.

(iii) One of the likely features of monopoly is that high profits enable
competing suppliers to enter the market.

(iv) If increased economies of scale are experienced by agribusiness

firms, this is likely to result in rising unit costs of production.

(8 marks)

(f) The demand function of cheese in Nairobi is given by Q= 100 - 4P2

where P is the price per kg of cheese and Q is the quantity demanded per week.

Calculate the price elasticity of demand for cheese at a price of Kshs.4 and

interpret the results. (5 marks)

(g) “Economic resources are considered to be scarce”. Explain and relate

to the question of how an agro pastoralist in Garissa should allocate a
loan received from AFC. (5 marks)

(h) A farmer wants to produce cotton using capital and labour. With the

aid of a well labeled diagram, explain what will happen to his iso cost

line if the wages increased. (5 marks)

2.
(a) The broad definition of agriculture encompasses different groups of firms.

What are these groups and what are their functions in the agricultural

sector? (8 marks)

(b) A Kenyatta University agriculture student carried out an experiment

to find out the effects of using different imazpyr levels to control Striga

in maize. She recorded her findings in the table below.
Amount of Total production of Marginal product Average product
imazpyr

maize (kg) 1 3 5 7 9 11
(g/ha) 800 2700 4300 5040 4950 4800

(i) Using your knowledge of agribusiness economics, calculate the marginal

product and average product at each imazapyr level.

(ii) What additional information would you need in order to calculate the

optimal level of imazapyr use for this student?

(7 marks)

3.
(a) “Price competition is not beneficial under monopolistic competition

and so the firms have to go for non-price competition”. Why is it so?

(3 marks)

(b) The inverse market demand curve for a good is P = 100 - 0.25Q

and the inverse market demand curve for a good is P = 20 + 0.55Q.

Calculate the equilibrium price and quantity.
(4 marks)

(c) A market with demand Q = 2500 - 4p is supplied by a monopoly

with costs C = 350 + 2Q + Q2. Calculate the equilibrium price, output

and monopoly profits. What would be the equilibrium if the market was

supplied competitively by firms, and each individual firm had the same

costs? (8 marks)

4.
(a) List the main types of agricultural cooperatives found in Kenya.

(4 marks)

(b) List the major problems that the agricultural cooperatives face today?

(3 marks)

(c) Discuss the main goals of a good market performance.
(8 marks)

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