Student ID... Signature... UNIVERSITY OF GHANA (All rights reserved) BSC BACHELOR OF ARTS SECOND SEMESTER EXAMINATION:

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1 Student ID Signature UNIVERSITY OF GHANA (All rights reserved) BSC BACHELOR OF ARTS SECOND SEMESTER EXAMINATION: DEPARTMENT OF ECONOMICS ECON 458: AGRICULTURAL ECONOMICS II (3 Credits) INSTRUCTION: ANSWER THREE QUESTIONS IN ALL TIME ALLOWED: TWO (2) HOURS SECTION A Answer all questions in this section on the question paper. Each question bears 1 Mark Answer True or False to the following statements. 1. The statement of financial position gives a complete picture of agricultural projects 2. Unemployed sons and daughters of the middle class are a bigger social problem than employed workers earning low incomes. 3. Wage differential is the only factor that causes agricultural labour to migrate from the rural to the urban areas. 4. In the World Trade Organisation (WTO) binding a tariff means having the imposing nation agree not to raise it until the next six years for developed countries and ten years for developing countries. yas',!fe-we BWfMfj HiMIA ;SWMMNOJMI1!!!l!M!V' 9H*WlQAf F.mp... MRS. ABIGAIL A. ADAKU PAGE 1 OF 7

2 5. The General Agreement on Tariffs and Trade (GATT) covers trade in goods and services. 6. The trade policy market is more efficient than the foreign exchange market. 7. National treatment is a pillar ofwto because it ensures that liberalisation commitment are offset by domestic taxes. 8. Under the WTO member nations have no right under any circumstance to restrict trade. 9. Changes in time of sale is an intangible benefit of agricultural projects. 10. Losses avoided is a tangible benefit of agricultural projects. 11. Creation of new job opportunities is a tangible benefit of agricultural projects. 12. Project boundary price entails the only market prices for projects that produce and market their products. A Select the best answer from the four options given for questions Pollution from the use ofagrochemicals (pesticides) and creation of solid and liquid wastes can be classified as... a. Endogenous problem b. Exogenous problem c. Institutional problem -d. Governmental problem we Ma, M4W 4& ; AW_. MRS. ABIGAIL A. ADAKU PAGE 2 OF 7

3 14. Frequent changes in government policies affecting the operation of the agricultural sector can be classified as... a. Endogenous problem b. Exogenous problem c. Institutional problem d. Governmental problem 15. Farmer's vulnerability to unethical trading partner's behaviour can be classified as... a. Endogenous problem b. Exogenous problem c. Institutional problem d. Governmental problem 16. Financial management entails the following except... a. Capital Structure b. Capital budgeting c. Working capital d. Capital distribution 17. Evaluating the size, timing and risk of future cash flows is known as... a. Capital budgeting b. Capital structure c. Working capital d. Capital distribution 18. In agricultural project analysis, which of the following financial statements can be used to assess profitability? a. Balance sheet b. Income statement c. Statement of owner equity d. Cash flow statement 19. Cooperatives were introduced into West Africa in the 1920s mainly for which of the following crops? a. Food b. Cocoa c. Fruit d. Vegetables 20. Which of the following is not one of the principles of cooperatives? a. Political and Religious neutrality b. Cash trading c. Sharing savings equally d. Promotion of education ftm M1Mtt1fSd'W'iIbMMi'~&& a 'tmw',hw"mltfhm*wumrimt Ri. MRS. ABIGAIL A. ADAKU PAGE 3 OF 7

4 21. One agricultural land tenure system where ownership is not separated from management of the land is... a. Plantation agriculture b. Share cropping c. Family farming d. Tenancy 22. Cooperatives in Ghana are... a. Government organisations b. Private enterprise c. Membership organisations d. Local administrations 23. Consumer cooperatives.... a. Sell to consumers but are owned by investors b. Are formed and owned by consumers to purchase items c. Are not allowed in Ghana d. Are grocery stores formed by farmers in cities 24. Farmers organize and operate marketing cooperatives to.... a. Purchase farm supplies b. Achieve quality improvements not available to individual producers through grading c. Marketing large volumes d. All of the above 25. Cooperatives benefit consumers as well as producers by a. producing quality products and enforcing grades and standards b. Subsidizing cheaper prices to the consumer c. Paying reduces prices to producers d. Paying high prices to producers 26. The primary reason for farmers joining cooperatives is to.... a. Improve their well-being b. Drive other firms out of business c. Gain greater knowledge of agriculture d. Help the community 27. A market clearing point exists for each of the following markets except... a. Urban formal sector b. Urban informal sector c. Rural labour market d. None of the above 28. Which of the following is not typically an element In the structural change that accompanies development? fmfm a0'o'. 4 kg Ed.,ft H w &+S;C,WWS'.. MRS. ABIGAIL A. ADAKU PAGE40F7

5 51 a. Increase in the share of agriculture in GOP (Gross Domestic Product) b. Increase in manufacturing as a share of GOP c. Increase in urbanization d. All of the above changes accompany development 29. In the Harris-Todaro model, in equilibrium, the expected urban wage rate will be... the rural wage rate. a. Greater than b. Equal to c. Less than d. None of the above 30. Suppose migrants are risks averse, then in the Harris-Todaro model, in equilibrium, the expected urban wages will be... the rural wage rate a. Greater than b. Equal to c. Less than d. None of the above 31. Which of the following, is not one of the reasons why the labour force concept is so complex in developing countries? a. Full time work b. Part time work c. Working for one's own family d. Discouraged workers 32. The most comprehensive approach to the estimation of labour underutilization is... a. Rate of unemployment b. Surplus-labour c. Replacement of labour-use with income criterion d. Labour underutilization schema 33. The WTO Agreement on Agriculture (AoA) is one of how many sectoral agreements in the Uruguay round? a. 2 b. 3 c. 4 d Where does the WTO AoA place support for agricultural research? a. Amber box b. Green box c. Blue box d. All the above - ww MRS. ABIGAIL A. ADAKU PAGE 5 OF 7 FEmeA;

6 35. Which of the following gives an indication why agricultural projects sometimes prove wrong? a. Inappropriate technology b. Inadequate support systems and infrastructure c. Failure to appreciate the social environment d. All the above 36. Which ofthe following elements is not included in the Cost Insurance Freight (CIF) price? a. Freight charges to point of import b. Insurance charges c. Unloading from ship at port d. Import duties and subsidies 37. Which of the following cost elements is not included in the F. O. B price? a. Local marketing and transport costs b. Import port charges including taxes, storage, loading, fumigation and agents' fees c. Export taxes and subsidies d. Project boundary price 38. Which of the following is a cost of agricultural projects? a. Contingency allowance b. Taxes c. Debt service d. All the above 39. Too optimistic a calendar for project implementation is a problem of... a. Project design b. Project implementation c. Project analysis d. All of the above 40. Errors when translating technical assumptions into projections of project performance is a problem of... a. Project design b. Project implementation c. Project analysis d. All of the above - ;if 'M6$ I.M ew *&!9&W &,., - MRS. ABIGAIL A. ADAKU PAGE 6 OF 7

7 SECTIONB Answer only ONE (1) question from this section I. a. Write down four (4) ways in which contract farming enhances th e management of farm businesses in Ghana. (4marks) b. Distinguish between the income statement, the balance sheet and the cash flow statement. (6marks) c. Assume that a farmer has current assets including cash of GHS5,000, GHS7, 174 in livestock inventory, GHS56,997 in crop inventory, purchased inputs of GHS8,3 77, cash invested in growing crops of GHS2,834, and prepaid insurance of GHS975. In addition, assume that the firm has longer-termed assets of investments in cooperatives ofghs577, land and buildings ofghs589, 272, farm equipment ofghs 100,738, and breeding livestock of GHS 17,499. Assume that the operator dwelling is worth GHS91,683. Assume that the current liabilities include notes payable within the year of GHS 15,600, current position of long-term debt of GHS7,706, accrued interest of GHS3, 115, and accounts payable ofghs4,924. Finally, assume that the long-term debt includes GHS67,553 of real estate debt and GHS9,040 of equipment debt. i) What is owner equity? (2marks) ii) Construct the firm's balance sheet (8marks) d. What evidence can you give that gains from membership with the World Trade Organisation (WTO) exists? (lomarks) 2. a. Give five reasons why strengthening of Agricultural Cooperatives can serve as a tool for agribusiness development in Ghana. (Smarks) b. Gives three reasons why communal land tenure system can retard agricultural development in Ghana. (3marks) c. Assume that an agribusiness firm has total revenue of GHS 141,214, Cost of Goods Sold ofghs74,279, insurance payments ofghs3,599, rent and lease payments of GHS20,257, interest ofghs5,711 and depreciation ofghs12,620. Construct the firm 's income statement. (6marks) d. Every project goes through six (6) aspects of preparation and analysis. Identify these aspects and briefly explain them. (6marks) e. It is often argued by development experts that the WTO's Agreement on Agriculture (AoA) is harmful to developing countries. State the elements of the AoA and give three reasons why you agree or disagree with this opinion by development experts. (lomarks) -MRS. ABIGAIL A. ADAKU PAGE 7 OF 7 & EibWiA'iW'i'U"INWWk*@ZM i *'$"i" AA, AdW&»