NEDSJ F PJNI" I'IFImIBIFI Ul'iIVERSITY EXAMINER(S) QUALIFICATION: BACHELOR OF ECONOMICS FIRST OPPORTUNITY EXAMINATION QUESTION PAPER

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1 I'IFImIBIFI Ul'iIVERSITY OF SCIENCE nno TECHNOLOGY FACULTY OF MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE QUALIFICATION: BACHELOR OF ECONOMICS QUALIFICATION CODE: 07BECO LEVEL: 7 COURSE CODE: EOA61lS COURSE NAME: ECONOMICS OF AGRICULTURE SESSION: JUNE 2017 PAPER: THEORY DURATION: 3 HOURS MARKS: 100 FIRST OPPORTUNITY EXAMINATION QUESTION PAPER EXAMINER(S) Mr Eslon Ngeendepi MODERATOR: Mr. Pinehas Nangula NEDSJ F PJNI" INSTRUCTIONS Answer ALL the questions. Write clearly and neatly. Number the answers clearly. This question paper is made up of four (4) sections. Answer Section A, on the attached answer sheet. Answer ALL the questions and in blue or black ink. Start each question on a new page in your answer booklet. THIS QUESTION PAPER CONSISTS OF 10 PAGES (Including this front page)

2 SECTION A 10 Marks Instructions: Answer all the questions All answers should be on the answer sheet provided on page 10. Tear the page off and place it inside your examination script. QUESTION 1 [10 MARKS] 1.1 Which of the following variable is not held fixed when drawing a market demand curve? Prices of substitute goods Consumer incomes Consumer tastes Quantity of good demanded. 1.2 Which of the following variables is not held fixed when drawing a market supply curve? Price of the good Technology Number of seller Prices of input. 1.3 When the price of commodity A is cut by 10%, household spending on A falls by 10%. This is an example of: Perfectly elastic demanded Elastic demand Unitary elasticity of demand inelastic demand Which one of the following is not a facilitation function in market analysis? standardization function grading function financing function storage function Cost incurred when actual monetary payment is made is known as the: opportunity cost explicit cost implicit cost none of the above 1.6 Which one of the following pairs of factors of production and returns to the owners of the factors of production is correct? Labour/wages; land/rent; capital/profit; entrepreneur/interest Labour/profit; land/rent; capital/interest; entrepreneur/wages Labour/wages; land/interest; capital/rent; entrepreneur/profit Labour/wages; land/rent; capital/interest; entrepreneur/profit. IQ

3 Use the information provided below to answer question 1. 7 below. The demand and supply curves for beef steak in a market are listed below as: Qd = 200 2p CL = P 1.7 If this market converges to equilibrium, the price and quantity will be: P = and Q = P = and Q = P: 110 and Q=43 P =43 and Q: Assume that milk has an inverse demand function expressed elasticity of demand between P =N$25 and N526 is: -5.0 as P =500 12Q. The own-price The table below shows a hypothetical total utility schedule for a consumer of traditional beer. Use the table to answer questions 1.9 below. Table 1: Total Utility Schedule Traditional beer Total Utility consumed O O a) b) C) d) Based on the above, you can conclude that the: marginal utility of the fourth traditional beers is 60 utils marginal utility of the second traditional beers is 270 utils average utility of three traditional beers is 90 utils average utility of the five traditional beers is 80 utils.

4 1.10 Suppose that a shoe manufacturer that employs six workers is able to increase the average product of labour from 5 pairs of shoes per hour to 6 pairs of shoes per hour by hiring the seventh worker. The seventh worker's hourly marginal product is: a) 1 pair of shoes b) 7 pair of shoes c) 11 pairs of shoes d) 12 pairs of shoes.

5 SECTION B 10 MARKS QUESTION 1 Carefully read the statements below and match them with the right term from words/terms provided in the box below. Production efficiency Allocative efficiency Normative economics Positive economics Cardinal utility Ordinal utility Indifference curve lsoquant Inferior good Normal goods Working capital Operational credit Economic growth Economic development Constant return to scale Decreasing return to scale Marginal Rate of Substitution Quota Marginal Rate of Technical Substitution Tariff Change in demand Change in quantity demand Accelerators Essentials 1.1 Goods for which consumption rises (falls) when income increases (decreases). 1.2 A curve that reflects the combination of two inputs that will produce a specific level of output. 1.3 Capital or credit used to purchase inputs that are consumed in the productive process e.g. feed, fertilizer, etc. 1.4 Based on statements that contain opinions and value judgement. Such statement contain judgement about "what ought to be or "what should be. 1.5 Resources are being used to produce the combinations of goods and services that society wants most, given their income levels. 1.6 Where you rank bundles of goods, but cannot say how much greater one bundle is than another. Ranking is the only thing that matters when dealing with ordinal utility. Goods are ranked in order of preference: First, second, third etc. 1.7 Slope of an indifference curve.

6 Movement along a demand. A limit on the amount of goods imported. Factors or conditions that are required for increased agricultural production. SECTION C : CALCULATION QUESTIONS 40 MARKS Instructions: Answer all the questions. Answer each question on a new/clean page. QUESTION 1 [14 MARKS] 1.1 Graphically illustrate production stages and explain their relationship with the marginal physical product (MPP) and average physical product (APP). (6) 1.2 Suppose that a Mutton producer is facing the following situation: Equilibrium output (Q) Average Total Cost (ATC) Market price (P) = 900 units = N$30-OO = NS700-OO As an expert the farmer would like to make use of your service to calculate the following: a) Profit/ Loss per unit (2) b) Total cost (TC) (2) c) Total Revenue (2) d) Total Profit/ Loss (2)

7 QUESTION 2 [6 MARKS] Consider a production function Y = X1 X2. The price of input X1 is N520 and the price of input le5 N310. Which combination of the two inputs will produce maximum output when the farm manager has only N$ to spend on them? (6) QUESTION 3 [20 MARKS] 1.1 In January 2015, Mr Van der Merwe a maize meal farmer in the Grootfontein-Otavi constituency was granted a productive loan of N$ from Agribank, payable over 10 years at an interest rate of 15%. Calculate the interest rate payable on this loan amount? (2) 1.2 In January 2016, The Government ofthe republic of Namibia, declared a state of emergency clue to severe drought affecting Namibia. This in turn prompted Agribank to lower the interest rate charged on all existing loans. interest rates on productive loan were lowered to 10%, on the outstanding loan amount. Determine the new interest amount payable by Mr Van Der Merwe on the outstanding loan amount. (3) 1.3 Suppose that Van der Merwe, decides to borrow an extra, N5 30,000 from First National Bank Agriculture loan division, payable over four years. The bank charges him 10.7% ofthe initial loan amount as carrying charges for the loan. Payments are due in the following order: Year 1: Quarterly payments. Year 2: Semi-annual payments. Year 3: Monthly payments Year 4: Annual payments a) Determine the total charges by First National Bank. (3) b) Determine the number of payment to be made on the loan. (2) c) Calculate true interest rate to be paid by Mr Van der Merwe? Show all your calculations including the formula used. (10)

8 SECTION D : DISCUSSION QUESTIONS 40 MARKS Instructions: 0 Answer all the questions in this section. 0 Answer each question on a new/clean page. QUESTION 1 [20 MARKS] Refer to the case study on the performance of the Namibian agriculture sector below and answer question 1.1. The fourth National Development Plan (N DP4) identifies agriculture as one ofthe priority sectors ofthe Namibian economy with significant growth potential and while that may be so let me pause briefly and reflect on past economic trends of the agricultural sector. The national economy as a whole grew by 4.6 % a year between 2000 and 2011 while the growth in agriculture over the same period was merely 1.4 % per annum. For a sectorthat underpins the livelihood of about 70% of the population this trend must be cause for concern. Overall contribution to GDP dropped from about 7.4% in 1980 to 3.2% in 2013 while forthe same period the GDP contribution from manufacturing increased from 8.4 % to 12.1 % [Source : Adapted from Namibia's Agricultural Outlook Conference, 29 March 2017] 1.1 a) The agriculture sector is said to be unique from all the other sectors. List the two features that makes the agriculture sector unique from the other sectors. (2) b) List four ways in which the agriculture sector can contribute to economic development of Namibia. (4) c) List four main challenges facing the Namibian agriculture sector. (4) 1.2 What are the main challenges for land reform in Namibia? (4) 1.3 Farmers and processors play a major role in supplying the demanded commodities to the market. List and discuss any three factors that influence the supply ofgoods and services to the market. (6)

9 QUESTION 2 [20 MARKS] 2.1 A marketing function is a fundamental or basic physical process or service required to give a product the form, time, place and possession utility consumer desire. Using an example of your choice, explain how a consumer can derive the four mentioned utilities from the chosen commodity. (8) 2.3 We learnt in class that in order for products to have the four utilities mentioned in question 2.1 above, various marketing actions or functions must be performed. Briefly list the four basic functions. (4) 2.4 Briefly in your own words, explain agricultural marketing to someone who is unfamiliar with the subject. (2) 2.5 What factors do you think have contributed to the continuing high cost of food marketing in Africa? (4) 2.6 Define the term consumer sovereignty. (2) TOTAL MARKS 100

10 Student number:... ANSWER SHEET FOR SECTION A Mark the correct answer with an X

PPJNI" I IFIITIIBIH UI'IIVERSITY EXAMINER(S) FACULTY OF MANAGEMENT SCIENCES QUALIFICATION: BACHELOR OF ECONOMICS

PPJNI I IFIITIIBIH UI'IIVERSITY EXAMINER(S) FACULTY OF MANAGEMENT SCIENCES QUALIFICATION: BACHELOR OF ECONOMICS I IFIITIIBIH UI'IIVERSITY OF SCIENCE HI ID TECHNOLOGY FACULTY OF MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE QUALIFICATION: BACHELOR OF ECONOMICS QUALIFICATION CODE: 07BECO LEVEL: