POLYTECHNIC OF NAMIBIA SCHOOL MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE ECONOMICS OF AGRICULTURE. Mr Eslon Ngeendepi

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1 POLYTECHNIC OF NAMIBIA SCHOOL MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE ECONOMICS OF AGRICULTURE COURSE CODE: EOA611S DATE: June 2014 DURATION: 3 Hours MARKS: 100 EXAMINERS: MODERATOR: Mr Eslon Ngeendepi Mr Obrein Samahiya 1st OPPORTUNITY EXAMINATION QUESTION PAPER This paper consists of 6 pages including this front page. INSTRUCTIONS 1. A pocket calculator may be used 2. This examination paper is divided into FOUR sections. 3. All questions are compulsory.

2 Instructions: Answer all questions SECTION A 20 Marks 1. Which of the following diagrams best illustrates the immediate impact of a food safety scare due to Mad Cow disease? (Note: 0 0 is the original relationship and 0 1 is the new relationship.) a. Pt>e&t b. Do Do Qba&f a_ c.pbeef d. pbeef P セ@ Do D, a beet a_ 2. Under Section 2 of the Agriculture Commercial Land Reform Act of 1995, the established Commission has the duty to: (a) provide land for commercial farming to those who want to produce on land. (b) expropriate land. (c) look for land and advise the Minister on the land available for redistribution. (d) to investigate matters relating to the exercise of powers by the Minister on land acquisition and redistribution. 3. Which of the following would be a fixed cost on a typical crop enterprise budget? (a) land charge. (b) machinery repairs. (c) labor repairs. (d) harvesting expense. 4. One of the goals of land reform includes: (a) expanding land for the current owners. (b) creating more jobs for Namibians. (c) expanding the urban areas. (d) returning land to its previous owners. 5. An amortized loan repayment plan with a "balloon" payment: (a) has all the principle due in one payment. (b) has each total payment larger than the previous one. (c) adjusts the interest rate after each payment. (d) has more principle due in the final payment in the others. 2

3 6. In the first stage of production level? (a) total physical productivity increases. (b) average physical productivity increases. (c) marginal physical productivity increases. (d) all of the above. 7. Which one of the following is not a physical function in market analysis. (a) storage. (b) buying and selling. (c) transportation. (d) processing. 8. If an economy can produces maximum output using minimum resource it has attained. (a) elastic efficiency. (b) technical efficiency. (c) economic efficiency. (d) resource efficiency. 9. Economic growth is a function of the following model: (a) the production function. (b) the saving function. (c) the labor supply function. (d) a and b only. 10. Which of the following is not the main reason for trade barriers? (a) to collect duty from imported goods. (b) self sufficient purpose. (c) to protect infant industry. (d) to access much cheaper products. 3

4 SECTION B 10 MARKS Instructions: Read all the questions carefully Answer all the questions QUESTION 1 Consumption Credit Appraisal Variable Place utility Depreciation Wholesaler's Social Capital Inferior good Retailers Farm Credit Productive Credit Land Reform Hypothesis Institutional Approach Form Utility Engel Curve Collateral New utility Carefully read the statements below and match them with the right term from words/terms provided in the box above. 1.1 An implicit cost of doing business that reflects the wear and tear or consumption of plant and equipment during the year. 1.2 The value added to basic commodities when they are converted into finished products. 1.3 Large and efficient marketing system will not be possible without a well developed transport and communication system. 1.4 Emphasizes the "Who does what" of marketing Form of credit used to increase production or income or used to purchase land, livestock, equipment, seed, fertilizer, etc. 1.6 Societal arrangments whereby Governments administers possession and the use of land This refers to the assets borrowers pledge as security in loan transaction. 1.8 The process of estimating the market value of an asset. 1.9 Group of stores owned and operated by the same firm Measures of an event or quantity that can take different values. 4

5 SECTION C: CALCULATION QUESTIONS 40 MARKS QUESTION 1 [25 Marks] A grape farmer in the Karas region gave you the following algebraic equation for the demand schedules estimated by a previous economist who worked for her: Q = 400-4P The farmer gives you the prices as follows: N$90.00, N$70.00, N$50.00, N$30.00 and N$ She wants you to help her to calculate and tabulate the following: a) Unit sales at different price level b) Total revenue c) Marginal revenue d) Arc price elasticity of demand e) The Price elasticity of demand QUESTION 2 [15 Marks] 2.1 Note, use the the graph below to answer questions (a),(b),(c). Robbin likes a beverage (Coca-Cola) with her wings. There is only one place where she can buy this combination, Wings 'n' Suds. Using the graph below, let the number of Coca-Cola be on the vertical axis and the number of wings on the horizontal axis. a) Robbin has her choice of getting 12 bottles of Coca-Cola and 3 wings or 3 bottles of Coca- Cola and 12 wings, free of charge. Which bundle will she choose?why? (3) b) Calculate the MRS between points A and E. (Show all your working/formula). (2) 12 \ 6 1 I I I I 3.I

6 1.2 After careful scrutiny, Robbin budgets N$12 per week for Wings 'n' Suds. Consider the following: a) Graph and label the axes to show how much of each good Robbin is able to buy, if the price of a buffalo wing is N$0.50, while the price of Coca-Cola is N$1.50. (4) b) In order to attract more customers to Wings 'n' Suds, management decides to lower the price of Coca-Cola to N$1.00. Show what happens to Robbin's budget line compared to answer in (a). (2) c) Instead of (b), assume there is a sudden shortage of Buffalo wings available. Now, Wings 'n' Suds has to raise the price of a wing to $3.00. Show how this event changes Robbin's budget line relative to (a). (2) d) Robbin, after winning N$1,000 in the Texas lottery, decides that she can now spend N$40/week at Wings 'n' Suds. Show how this event changes Robbin's budget line relative to (a). (2) SECTION D: 40 MARKS QUESTION 1 [40 Marks] a) List FOUR types of farm tenancies? (4) b) What are the forms of government intervention in agriculture? c) List the FOUR basic principles of concern for our planet. (4) d) What is the role of government in institutional support? (6) e) List the steps you would follow when organizing a cooperative. (6) f) What are the main types of cooperative according to the functions performed and what are the goals of these types of cooperatives? (8) g) Define the term agriculture economics and clearly state why the agriculture sector is unique from the other sectors? (4) a) The food marketing bill has been increasing steadily since the 1990's. What the major factors accounting for such increases? (3) TOTAL MARKS: 100 6