ICAR AIEEA-PG (Master's admission and PG scholarship) · India · National Testing Agency for ICAR
Original practice questions written to the published syllabus · not past papersMaking the best use of land, labour, capital and machinery on a farm: measuring efficiency, costing, planning and budgeting, and keeping records.
In the exams: agricultural master's entrance examinations, agricultural economics (heavy); agricultural economics PhD entrance and fellowship examinations, farm management (heavy); cost analysis in agricultural field officer recruitment in banking (present); agricultural scientist eligibility tests (present)
How our questions for ICAR AIEEA-PG spread across the units of Farm Management. Difficulty: 30 easy, 45 medium, 8 hard.
| Cost concepts in farm management | 10 | |
| Valuation of farm assets and liabilities | 8 | |
| Linear programming in farm planning | 8 | |
| Decision-making under certainty, risk and uncertainty | 7 | |
| Definition and scope of farm management | 6 | |
| Partial budgeting | 5 | |
| Enterprise budgeting | 5 | |
| Whole-farm planning and budgeting | 5 | |
| Farm records and accounts | 5 | |
| Farm inventory | 5 | |
| Farm cost accounting | 5 | |
| Management of land, labour, capital and machinery | 5 | |
| Farming systems and the systems approach | 5 | |
| Measures of farm efficiency | 4 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
Replacing 10 kg of concentrate with 25 kg of green fodder keeps a cow's milk yield unchanged. Concentrate costs 30 currency units/kg and green fodder 3/kg. What does the substitution principle say?
A. Substitute: substitution ratio (0.4) exceeds price ratio (0.1), so cost falls by 225 currency units
Substitution ratio = units replaced ÷ units added = 10/25 = 0.4. Price ratio = price of added input ÷ price of replaced input = 3/30 = 0.1. Since 0.4 > 0.1, substitution lowers cost: 300 currency units saved − 75 added = 225. Needing more kilograms, or a ratio below 1, does not matter; the comparison with the price ratio decides.
Further reading: Johl and Kapur, Fundamentals of Farm Business Management
In the short run a farm should continue producing a crop, even at a loss, so long as the price
D. covers average variable cost
Fixed costs are paid whether or not the farm produces, so in the short run it pays to produce whenever revenue covers variable costs and contributes something to fixed costs: P ≥ AVC. In the long run price must cover average total cost, the tempting distractor.
Further reading: Johl and Kapur, Fundamentals of Farm Business Management
A combine valued at 500,000 currency units is depreciated by the diminishing-balance method at 20 per cent a year. Depreciation in the third year is
B. 64,000 currency units
Year 1: 500000 × 0.20 = 100000, book value 400000. Year 2: 400000 × 0.20 = 80000, book value 320000. Year 3: 320000 × 0.20 = 64000. 100000 is year 1 and 80000 year 2; 60000 wrongly reduces the charge by a straight 20 per cent of the original charge each year.
Further reading: Kay, Edwards and Duffy, Farm Management
In a partial budget, which pair of items appears on the credit (positive) side?
D. Added returns, reduced costs
The credit side lists changes that raise profit: new returns and costs avoided. The debit side lists added costs and returns given up. Net change = (added returns + reduced costs) − (added costs + reduced returns).
Further reading: Kay, Edwards and Duffy, Farm Management
A whole-farm budget, rather than a partial budget, is needed when
B. a major reorganisation, such as a change of farming system or a large investment, is being considered
Whole-farm budgets are used for large changes that affect most resources and enterprises, for new farms, and for lenders who need the full picture. Small changes affecting part of the farm, such as a dose, a machine or a variety, are handled by partial budgets.
Further reading: Kay, Edwards and Duffy, Farm Management
A farm map showing field boundaries, areas, soil types and irrigation sources is an example of
B. a physical (production) record
Records are classed as physical (farm map, crop, livestock, labour and machinery records) or financial (inventory values, cash book, ledger, statements). A farm map records physical facts, not money.
Further reading: Johl and Kapur, Fundamentals of Farm Business Management
In the double-entry system of farm accounting, the trial balance is prepared to
A. check that total debits equal total credits in the ledger
Every transaction is entered as a debit and a credit, so ledger totals must agree; the trial balance tests this and catches many arithmetic errors. Net worth comes from the balance sheet; cash receipts go in the cash book; inventory valuation is a separate step.
Further reading: Johl and Kapur, Fundamentals of Farm Business Management
The farm inventory is usually taken
A. at the start and end of the year
Opening and closing inventories are needed to measure the change in stock values that enters farm income and to prepare the balance sheet. Dates are chosen when stocks and work are low, not at peak season. The year meant is the farm accounting year.
Further reading: Johl and Kapur, Fundamentals of Farm Business Management
Compared with the survey method, the cost-accounting method of collecting farm cost data is
C. more accurate but more expensive, because records are kept continuously through the season
The cost-accounting method records each operation and input as it happens, usually through a resident investigator, so it is accurate but costly. The survey method relies on recall in one or a few interviews: cheaper, wider coverage, less accurate.
Further reading: Johl and Kapur, Fundamentals of Farm Business Management
The usual order of stages in farming systems research (FSR) is
D. diagnosis, design, on-farm testing, extension
FSR first describes the farming system and its constraints (diagnosis), then chooses technologies to address them (design), tests them under farmers' conditions (on-farm testing), and spreads the successful ones (extension/diffusion), with feedback to research.
Further reading: Farming systems research literature
Ten here, 83 in the app. The Laisha app has every practice question we have written to ICAR AIEEA-PG in this subject, marked as you go, with timed papers, a jump-to-unanswered list and a certificate when you pass at 70 per cent.
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