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nAm I 8 I A U n IVERS ITY OF SCIEnCE AnD TECHnOLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNITNG, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE: 07BECO LEVEL: 7
COURSE CODE: EOA611S COURSE NAME: ECONOMICS OF AGRICULTURE
SESSION: JULY 2016 PAPER: 1
DURATION: 3 HOURS MARKS: 100
SUPPLEMENTARY/ SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) Mr Eslon Ngeendepi (NUST)
MODERATOR: Dr Cyril Ogbokor
INSTRUCTIONS 1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number the answers clearly.
4. This examination paper is divided into two sections.
PERMISSIBLE MATERIALS 1. Scientific calculator
THIS QUESTION PAPER CONSISTS OF 4 PAGES (Including this front page)
Instructions:
SECTION A
50 MARKS
• Answer all the questions in this section in your examination book.
• Answer each question on a new, clean page.
QUESTION 1 [25 Marks]
1.1 Connie allocates N$200 of her monthly food budget between two goods: meat and potatoes.
a) Suppose meat costs N$4 per Kg and potatoes N$2 per kg. Derive Connie's budget constraint and her
budget line. (6)
b) Suppose also that her utility function is given by the equation u(M,P} =2M+ P. What combination of
the meat and potatoes should she buy to maximize her utility? (Hint: Meat and potatoes are perfect
substitutes). (10)
c) Connie's supermarket is running a special promotion; If she buys 20 pounds of potatoes (N$2 per
kg) . She gets the next 10 kg for free. This offer applies only to the first 20 kg's (excluding bonus
potatoes) are still N$2 per kg. Draw her budget constraint. (4)
d) When an outbreak of potato rot raises the price of potatoes to N$4 per kg, the supermarket ends its
promotion. What does Connie's budget constraint look like now? What combination of meat and
potatoes will maximize her utility? (5)
QUESTION 2 [15 Marks]
2.1 Suppose that the demand function for beef in Namibia in 2006 is given as follow:
Demand:~= 10900 -130P
Price is calculated in N$ per kilogram and quantities in millions kilograms per year. The supply
function for the beef in that specific year is given as follows:
S-upply: 0s = 900 + 120P
a) Determine the new equilibrium market price of beef.
b) Determine the market equilibrium quantity.
2
(4)
(2)
2.2 From the information given in question 2.1 above, suppose a drought shift the supply curve to the
left and price increases to N$60.00 per Kg.
a) Determine the new equilibrium quantity. (3)
b) What is the price elasticity from the above information, and identify the type of elasticity? (6)
QUESITON 3 [10 Marks]
3.1 This information given at the end of the financial year of 2014 from XYZ farm. This farm has sold six
weavers at N$5000 each per year. The costs were given as follow.
Supplements (Licks) N$516 per head
Marketing Costs N$384 per head
Vaccines N$71 per head
Power N$1,000 per month
Labour Costs N$850 per month
From the above information you are required to calculate the farmers:
i. Profit
ii. Average Variable Cost
iii. Average Fixed Cost
3
(6)
(2)
(2)
Instructions:
SECTION B
50 MARKS
• Answer all the questions in this section in your examination book.
• Answer each question on a new, clean page.
QUESTION 1 [20 MARKS]
"The Namibian Development Corporation (NDC) is one of only a handful of state-owned enterprises that has
embraced the green revolution after it spent N$940 000 to install a solar photovoltaic system at its
premises".
1.1 Define the term green revolution. (2)
1.2 What are some of the key factors behind Green Revolution? (3)
1.3 What are the benefits of green revolution in agricultural development in Namibia? (6)
1.4 List three major challenges of green revolution. (3)
1.5 Define the term Agricultural extension services. (3)
1.6 Explain the role of government in institution support. (3)
QUESTION 2 [14 MARKS]
2.1 Why is agricultural credit important to agricultural development? (4)
2.2 Use the discount method to calculate the (a) the amount the borrower receives, (b) the periodic
payment, on N$500,000 loan that is payable in 2 years if the initial rate is 10 percent? Show all
your calculations and formula. (10)
QUESTION 3 [16 MARKS]
3.1 How can an urban industrial economy contribute to rapid development of the agriculture sector? (6)
3.2 Do you support the idea of government intervention in the agriculture sector? Justify your answer.
TOTAL MARKS 100
4
(10)