ASRB NET and ARS / SMS / STO recruitment · India · Agricultural Scientists Recruitment Board (ICAR)
Original practice questions written to the published syllabus · not past papersThe part agriculture plays in economic development, the classic theories of that role, and how price, land, credit, research, trade and subsidy policy are made and judged.
In the exams: agricultural economics PhD entrance and fellowship examinations, agricultural development and policy (heavy); agricultural development bank officer recruitment, economic and social issues (heavy); agricultural scientist eligibility tests, agricultural development and policy (heavy)
How our questions for ASRB NET and ARS / SMS / STO recruitment spread across the units of Agricultural Development & Policy Analysis. Difficulty: 24 easy, 39 medium, 8 hard.
| Lewis and Fei-Ranis models | 8 | |
| Trade and subsidy policy | 8 | |
| Performance of agriculture across world regions | 7 | |
| Research and development policy | 7 | |
| Role of agriculture in economic development | 5 | |
| Schultz and Mellor on agricultural transformation | 5 | |
| Land policy | 5 | |
| Water, energy and environment policy | 5 | |
| Induced innovation | 4 | |
| Price policy and minimum support prices | 4 | |
| Credit policy | 4 | |
| Poverty and inequality | 4 | |
| The policy process and implementation | 3 | |
| Food and nutrition security | 2 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
In the Fei-Ranis model, which statement describes phase two?
D. Marginal product of farm labour is positive but below the institutional wage, so the average surplus per migrant falls and industrial wages must rise
In phase two, each migrant takes away some output, so less food is left per migrant than the institutional wage; food prices rise, the terms of trade turn against industry (in favour of agriculture), and the industrial wage rises. Zero marginal product is phase one; marginal product above the wage is phase three.
Further reading: Fei and Ranis (1964)
A traditional farm sector has 500 workers producing 1,000 units of grain; each is paid the institutional wage equal to the average product. In Fei-Ranis phase one, 100 redundant workers move to industry and output does not change. What total agricultural surplus is now available to feed the migrants?
B. 200 units
Institutional wage = 1,000/500 = 2 units. After migration, the remaining 400 workers consume 400 x 2 = 800 units, leaving 1,000 - 800 = 200 units, i.e. 2 units per migrant, exactly the institutional wage, which is the defining feature of phase one. 800 is what the remaining workers eat, not the surplus. 0 recomputes the wage as the new average product (1,000/400 = 2.5), so the remaining workers eat everything.
Further reading: Fei and Ranis (1964)
According to Schultz, the key to transforming traditional agriculture is
D. supplying new high-payoff modern inputs and investing in farmers' education and skills
Because the return to more traditional inputs is low, Schultz saw transformation coming from new, profitable inputs (improved seed, fertiliser) plus human capital so farmers can use them, largely supplied by public research and extension. He also opposed keeping farm prices artificially low, arguing farmers respond to incentives.
Further reading: Schultz (1964)
Hayami and Ruttan explain Japan's agricultural growth path from about 1880 as mainly
A. biological and chemical innovation raising yield per hectare, as land was expensive relative to labour
Japan had scarce land and abundant labour, so the high land/labour price ratio induced land-saving technology: fertiliser-responsive varieties and irrigation. The mechanical, labour-saving path describes the United States.
Further reading: Hayami and Ruttan (1971, 1985)
Compared with a support price backed by government procurement, a deficiency (price-gap) payment
C. pays farmers the gap between a target price and the market price without the state buying the crop, so consumers face the lower market price
Under a deficiency payment the market price finds its own level and the budget pays the gap, so consumers gain and there are no stocks to hold. Procurement at a support price raises the market price and requires storage and disposal.
Further reading: Timmer, Falcon and Pearson, Food Policy Analysis, 1983
Zvi Griliches's pioneering study of the social returns to agricultural research concerned
A. hybrid corn in the United States
Griliches (Journal of Political Economy, 1958) estimated the social return to research on hybrid corn, and his earlier work studied its diffusion. It became the model for later returns-to-research studies.
Further reading: Griliches (1958)
Under the Uruguay Round Agreement on Agriculture, developing countries were to reduce bound agricultural tariffs by an average of
B. 24% over ten years, with at least 10% per tariff line
Developing countries: 24% average, minimum 10% per line, over ten years. 36% with a 15% minimum over six years was the developed-country commitment; 20% and 13.3% are the AMS reduction commitments for developed and developing countries.
Further reading: WTO Agreement on Agriculture
Five people have incomes of 60, 80, 120, 150 and 200, and the poverty line is 100. What is the poverty gap index (FGT with alpha = 1)?
D. 0.12
The poor are 60 and 80 with normalised gaps 0.4 and 0.2. PG = (0.4 + 0.2)/5 = 0.12, dividing by the whole population. 0.30 averages the gaps over the poor only; 0.40 is the headcount ratio (2/5); 0.04 is the squared poverty gap.
Further reading: Foster, Greer and Thorbecke, Econometrica 1984
Michael Lipton's 'urban bias' thesis (Why Poor People Stay Poor, 1977) argues that
D. political power concentrated in cities leads developing-country governments to neglect and tax agriculture
Lipton argued that urban classes - industrialists, workers, officials - shape policy to keep food cheap and channel investment to cities, starving agriculture where most of the poor live.
Further reading: Lipton (1977)
India's three farm laws enacted in 2020 to liberalise trade outside regulated markets, contract farming and stock limits were
C. repealed in 2021 after prolonged farmer protests
Parliament repealed the three Acts in 2021. The episode is used to show that reform design must address trust, consultation and the distribution of gains, not only efficiency.
Further reading: Farm Laws Repeal Act, 2021
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