MOI UNIVERSITY

SCHOOL OF AGRCULTURE AND NATURAL RESOURCES

Assignment - ARE 124/ ANR 211: Introduction to Agricultural Economics

Instructions to candidates: Answer any four (4) questions

1. (a) Using appropriate illustrations explain the law of variable proportions and examine
the relationship between total product, average product and marginal product
curves
(b). Explain the reasons for the inverse relationship between price and amount
demanded.
(c). Briefly explain properties of indifference curves

2. Explain why many firms are likely to experience economies of scale up to a certain
size and then diseconomies of scale after some point beyond that.
(b) Discuss the characteristics of a mixed economy.

3. (a). Discuss using well labelled diagrams the difference between income effect and
substitution effect.
(b). How does elasticity of demand guide decision making on price in an environment
where buyers and sellers interact? Provide explanations based on different categories
of elasticity.

4. (a). Explain any four factors that are considered in selecting a particular type of
farming system
(b) Why are high crop and livestock yields not necessarily synonymous with high
incomes for farmers?

5. Differentiate between the following terms as used in agricultural economics;

(a) Fixed input and variable input
(b). Journal and ledger book
(c). Resources and inputs
(d). Monopoly and oligopoly in market analysis

6. (a). State the scope of agricultural economics

(b). State the objectives of agribusiness processing
(c). Explain the concept of contract farming
(d). Define ‘farming system’ and discuss the relative merits and demerits of different
farming systems