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Principles Of Agribusiness Economics Question Paper
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.
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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 imazapr(g/ha) Total production of maize (kg) Marginal product Average product
1 800
3 2700
5 4300
7 5040
9 4950
11 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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