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 papersEconomic theory put to work for business decisions: demand, production, cost and pricing, with a short macro block. Named explicitly in agribusiness master's entrance syllabi.
In the exams: agricultural master's entrance examinations, agribusiness (heavy); agribusiness management PhD entrance and fellowship examinations (heavy); agricultural master's entrance examinations, agricultural economics (heavy)
ICAR AIEEA-PG Group 19 Agri-Business Management, Unit IX
Fundamentals of managerial economics: objectives of the firm, demand determinants and elasticity, production stages, cost curves and their relationships, market structures, break-even. Mostly definitions and one-step numericals, alongside SCP and agricultural marketing.
ICAR AIEEA-PG Group 06 Social Sciences, Unit II
Micro and macro basics: indifference curves, elasticity, law of variable proportions, returns to scale, perfect competition and monopoly, national income concepts, inflation and money.
How our questions for ICAR AIEEA-PG spread across the units of Managerial (Applied Agribusiness) Economics. Difficulty: 38 easy, 24 medium, 1 hard.
| Demand determinants, elasticity and forecasting | 10 | |
| Cost concepts and cost-output relationships | 10 | |
| Pricing under different market structures | 6 | |
| Objective of the firm and mathematical tools | 4 | |
| Introduction to behavioural economics | 4 | |
| Production function, least-cost combination and returns to scale | 4 | |
| National income and the circular flow | 4 | |
| Indifference curves and budget sets | 3 | |
| Multi-period production | 3 | |
| Supply in the short and long run | 3 | |
| Joint-product pricing | 3 | |
| Price discrimination: first, second and third degree | 3 | |
| Business cycles | 3 | |
| Demand for money | 2 | |
| Inflation | 1 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
The idea that people have limited information and computing capacity and so use rules of thumb rather than full optimisation is called
B. bounded rationality
Herbert Simon introduced bounded rationality; it leads to satisficing and heuristics. Rational expectations and perfect foresight assume the opposite, and revealed preference is a way of inferring preferences from choices.
Further reading: Simon; Kahneman, Thinking, Fast and Slow
Farmers are told either that a crop insurance scheme 'protects 80 percent of your income' or that it 'leaves 20 percent of your income exposed'. Take-up differs between the two groups. This illustrates
B. a framing effect
The two statements are logically identical; only the description differs, and choices depend on whether an outcome is framed as a gain or a loss. No price or income has changed. Adverse selection concerns who buys insurance when buyers know their own risk better than the insurer.
Further reading: Tversky and Kahneman, Science 1981
A household has 1,200 to spend on rice (X) at 40 per kg and pulses (Y) at 30 per kg. What is the maximum rice it can buy, and what is the slope of the budget line with X on the horizontal axis?
C. 30 kg; -4/3
Maximum X = M/Px = 1,200/40 = 30 kg. The budget line Px X + Py Y = M has slope -Px/Py = -40/30 = -4/3. 40 kg is M/Py, the maximum of pulses; -3/4 inverts the price ratio.
Further reading: Koutsoyiannis, Modern Microeconomics
The cross elasticity of demand between tractors and diesel is expected to be
B. negative, because they are complements
A rise in the price of diesel raises the cost of using tractors and reduces tractor demand, so the cross elasticity is negative. Substitutes, such as two edible oils, have positive cross elasticities.
Further reading: Salvatore, Managerial Economics in a Global Economy
In a packhouse the marginal product of labour is 20 boxes per worker-day at a wage of 200, and the marginal product of a machine-hour is 50 boxes at a rental of 400. To minimise the cost of its output the packhouse should
D. use more machine-hours and less labour
MP per unit of money: labour 20/200 = 0.10 boxes; machine 50/400 = 0.125 boxes. The machine gives more output per unit spent, so substitute toward it until MPL/w = MPK/r.
Further reading: Debertin, Agricultural Production Economics
In long-run equilibrium under perfect competition, price equals
B. minimum long-run average cost, and firms earn only normal profit
Entry removes economic profit and exit removes losses until P = MR = LMC = LAC at the minimum of LAC.
Further reading: Koutsoyiannis, Modern Microeconomics
A pulse crop grown in rotation raises the yield of the following cereal crop. The two enterprises are
A. complementary
Complementary enterprises are those where increasing one increases the other, as when legumes add nitrogen for the next crop. Competitive enterprises reduce each other; supplementary ones can be expanded without affecting the other, such as backyard poultry using idle family labour.
Further reading: Heady, Economics of Agricultural Production and Resource Use
Which is NOT a necessary condition for third-degree price discrimination?
B. Identical price elasticities of demand in the separate markets
Discrimination pays only if elasticities differ; with identical elasticities the profit-maximising price is the same in both markets. Market power, separable markets and no resale are all required.
Further reading: Koutsoyiannis, Modern Microeconomics
An electricity or irrigation water tariff that charges one rate for the first block of units and a lower rate for further blocks is an example of
A. second-degree price discrimination
Prices vary with quantity bought and buyers sort themselves by how much they use, which is second-degree discrimination. Third-degree splits identifiable groups (such as farm and industrial users); first-degree charges each buyer a personal maximum price.
Further reading: Koutsoyiannis, Modern Microeconomics
The correct sequence of business cycle phases is
D. expansion, peak, contraction, trough
Output rises in expansion to a peak, falls in contraction (recession) to a trough, and then recovery begins a new expansion.
Further reading: Mankiw, Macroeconomics
Ten here, 63 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.
Free for ten days, then one subscription of US$10 a month. We would rather say so here than have you find it later.
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