ICAR AICE-JRF/SRF (PhD admission and fellowship) · India · National Testing Agency for ICAR
Original practice questions written to the published syllabus · not past papersWhy countries trade, how trade is measured and regulated, and how an agribusiness actually exports.
In the exams: agricultural economics PhD entrance and fellowship examinations, trade (heavy); agribusiness management PhD entrance and fellowship examinations, international marketing (heavy); agricultural master's entrance examinations, WTO and trade (present)
ICAR AICE-JRF/SRF (PhD), Agricultural Economics Unit 3 (Public Finance and International Economics)
Ricardo, Heckscher-Ohlin and its theorems (Stolper-Samuelson, Rybczynski, factor-price equalisation), the Leontief paradox and its explanations, new trade theory and intra-industry trade, partial-equilibrium welfare of tariffs, quotas and export subsidies, optimum tariff, effective protection, terms-of-trade concepts, BoP adjustment (Marshall-Lerner, J-curve, absorption), PPP and interest parity, WTO AoA boxes, AMS and de minimis.
ICAR AICE-JRF/SRF (PhD), Agri-Business Management Unit 4 (international marketing of agri-products)
Market-entry modes and their trade-offs, Uppsala and OLI, EPRG, standardisation vs adaptation, export pricing and price escalation, Incoterms, letters of credit and documents, export promotion bodies, SPS/TBT compliance and Porter's diamond for agri clusters.
How our questions for ICAR AICE-JRF/SRF spread across the units of International Agri Trade & Export Management. Difficulty: 12 easy, 50 medium, 45 hard.
| Tariffs and non-tariff measures | 17 | |
| Export procedures and documentation | 15 | |
| International marketing mix | 9 | |
| WTO Agreement on Agriculture and its boxes | 7 | |
| Market-entry modes | 7 | |
| Heckscher-Ohlin factor-endowment theory | 6 | |
| Leontief paradox | 6 | |
| Product life-cycle theory of trade | 6 | |
| Porter's diamond | 6 | |
| Exchange rates | 6 | |
| Anti-dumping | 6 | |
| TRIPS, TRIMs, SPS and TBT agreements | 5 | |
| Absolute and comparative advantage | 4 | |
| Balance of payments | 4 | |
| Export promotion organisations | 3 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
Country A has 100 units of capital and 50 of labour; country B has 60 units of each. By the physical definition of factor abundance:
B. A is capital-abundant and should export the capital-intensive good
Compare ratios, not totals: K/L is 100/50 = 2 in A and 60/60 = 1 in B, so A is relatively capital-abundant and, under H-O, exports the capital-intensive good.
Further reading: Salvatore, International Economics
A country exports cheese worth 60 million and imports cheese worth 40 million. The Grubel-Lloyd index of intra-industry trade in cheese is:
C. 0.8
GL = 1 − |X − M|/(X + M) = 1 − 20/100 = 0.8. 0.2 is the net trade share alone; 0.5 and 1.5 come from dividing 60 by 40 or similar slips. The index lies between 0 (one-way) and 1 (fully two-way).
Further reading: Grubel and Lloyd (1975)
New trade theory, associated with Krugman, explains trade between countries with similar endowments mainly through:
A. Increasing returns to scale and product differentiation
Under monopolistic competition, scale economies make each country specialise in some varieties and trade them for others, generating intra-industry trade. Productivity and endowment differences are the Ricardian and H-O explanations.
Further reading: Krugman, Obstfeld and Melitz, International Economics
With the nominal rate E = 80 (domestic per foreign), foreign price level 110 and domestic price level 120, the real exchange rate (E × P*/P) is:
C. 73.3
RER = 80 × 110/120 = 73.3. 87.3 inverts the price ratio (80 × 120/110); 80 ignores prices; 96 multiplies by 120/100.
Further reading: Krugman, Obstfeld and Melitz, International Economics
For a large importing country, the optimum tariff equals the reciprocal of the foreign export-supply elasticity. If that elasticity is 4, the optimum tariff is:
C. 25%
t* = 1/ε = 1/4 = 25%. The gain comes from lowering the world price (terms-of-trade gain) and invites retaliation. With perfectly elastic foreign supply (small country) the optimum tariff is zero. 400% treats the elasticity itself as the rate, and 75% is 1 - 1/ε.
Further reading: Krugman, Obstfeld and Melitz, International Economics
In the export-subsidy example (Qs = 4P − 100, Qd = 300 − P, world price 100, subsidy 20), the net national welfare change is:
D. A loss of 1,000
Producer gain (300 + 380)/2 × 20 = 6,800; consumer loss (200 + 180)/2 × 20 = 3,800; treasury cost 4,000. Net = 6,800 − 3,800 − 4,000 = −1,000 (triangles 800 + 200). 3,000 ignores the treasury cost; 4,000 is the cost alone.
Further reading: Salvatore, International Economics
Tariff escalation refers to:
D. Tariffs that rise with the degree of processing of a product
Low duties on raw materials and higher duties on processed products give processors in importing countries high effective protection and discourage processing in exporting countries. Volume-linked rates describe a TRQ or safeguard.
Further reading: Salvatore, International Economics
An OECD country has a producer support estimate of 30 against gross farm receipts (including support) of 150. The %PSE is:
D. 20%
%PSE = PSE/gross farm receipts including support = 30/150 = 20%. 25% divides by receipts excluding support (120), the wrong basis. 500% inverts the ratio (150/30).
Further reading: OECD Agricultural Policy Monitoring and Evaluation
FOB value is 10,000, sea freight 800 and marine insurance 50. The CIF value is:
D. 10,850
CIF = FOB + freight + insurance = 10,000 + 800 + 50 = 10,850. 10,800 omits insurance, 10,050 omits freight, and 9,150 subtracts both instead of adding.
Further reading: ICC Incoterms 2020 and UCP 600
Documentary letters of credit are governed by the ICC rules known as:
B. UCP 600
UCP 600 governs documentary credits; URC 522 governs documentary collections; Incoterms allocate costs and risks; CISG is the UN sales convention.
Further reading: ICC Incoterms 2020 and UCP 600
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