State agricultural university MBA (ABM) admission · India · State agricultural universities via ICAR AIEEA-PG Group 19
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)
How our questions for State agricultural university MBA admission spread across the units of Managerial (Applied Agribusiness) Economics. Difficulty: 21 easy, 20 medium, 0 hard.
| Demand determinants, elasticity and forecasting | 8 | |
| Cost concepts and cost-output relationships | 7 | |
| 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 | 3 | |
| Multi-period production | 3 | |
| Price discrimination: first, second and third degree | 3 | |
| Indifference curves and budget sets | 1 | |
| Joint-product pricing | 1 | |
| Business cycles | 1 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
At an output where marginal revenue equals marginal cost, profit is at a maximum only if
D. MC cuts MR from below, so the slope of MC exceeds the slope of MR
MR = MC is the first-order condition; it also holds at a profit minimum. The second-order condition requires the second derivative of profit to be negative, i.e. MC rising faster than MR at that point. Minimum average cost, zero MR (revenue maximum) and P = AVC (shutdown point) are different conditions.
Further reading: Salvatore, Managerial Economics in a Global Economy
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
A potato grower refuses to sell stored potatoes below last season's peak price even though the current market and storage costs say she should. Which bias best describes this?
B. Anchoring
Her decision is pulled toward an initial number (last season's peak), which is anchoring; reluctance to realise a loss relative to that reference also fits loss aversion. Availability concerns how easily events come to mind, and economies of scope are a cost concept. The anchor here is a reference price: last season's peak.
Further reading: 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
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
A spice-grinding unit has fixed costs of 900,000 a year, sells at 75 per kg and has variable cost of 45 per kg. Its break-even output is
A. 30,000 kg
Break-even output = fixed cost / contribution per unit = 900,000 / (75 - 45) = 30,000. Dividing by price (12,000) or by variable cost (20,000) ignores that each unit contributes only the difference. Dividing by price plus variable cost (120) gives 7,500.
Further reading: Dwivedi, Managerial Economics
A processor's total cost rises from 1,000 to 1,060 when output rises from 100 to 105 units. The marginal cost over this range is
D. 12 per unit
MC = change in TC / change in output = 60 / 5 = 12. 10.1 is average cost at 105 units (1,060/105); 60 is the total change, not per unit. 0.08 inverts the ratio (5/60).
Further reading: Salvatore, Managerial Economics in a Global Economy
In long-run equilibrium under monopolistic competition,
D. demand is tangent to average cost, price exceeds marginal cost, and there is excess capacity
Free entry removes economic profit, so demand touches AC, but because demand slopes down the tangency lies on the falling part of AC, left of minimum AC. Minimum AC and horizontal demand describe perfect competition.
Further reading: Chamberlin; Koutsoyiannis, Modern Microeconomics
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
Ten here, 41 in the app. The Laisha app has every practice question we have written to State agricultural university MBA admission 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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