LEA Mock Test: Economics & Marketing Questions For Today

1. Which of the following best defines “marketing margin” in agricultural marketing?

• a) The difference between producer price and consumer price
• b) The total volume of produce sold in a market
• c) The share of government taxes in farm income
• d) The cost of production per hectare

2. Which one of the following is NOT a utility created by agricultural marketing?

• a) Time utility
• b) Place utility
• c) Ownership utility
• d) Form utility

3. Marketable surplus of a farm commodity is defined as:

• a) The total production including seed and home consumption
• b) Production minus the amount retained for family consumption and seed
• c) The amount sold exclusively to government agencies
• d) The total imports of a commodity in a year

4. Which market structure is most commonly assumed for primary agricultural markets in textbook analysis of price determination?

• a) Monopoly
• b) Oligopoly
• c) Perfect competition
• d) Monopsony

5. Price spread between farm gate and retail price is mainly due to:

• a) Marketing costs and margins of intermediaries
• b) Difference in soil fertility across regions
• c) Seasonal rainfall variability only
• d) Crop genetic differences

6. Which of the following promotes price discovery and competition in agricultural markets?

• a) Exclusive long-term contracts with a single buyer
• b) Transparent auction platforms and well-functioning regulated markets
• c) High entry barriers for traders
• d) Complete absence of market information

7. Which government instrument is primarily used to protect farmers by guaranteeing a minimum price for certain crops?

• a) Export subsidy
• b) Minimum Support Price (MSP)
• c) Sales tax
• d) Import tariff

8. Which of the following is a primary function of agricultural cooperatives in marketing?

• a) To increase fragmentation of marketable surplus
• b) To provide collective bargaining, aggregation and reduce transaction costs
• c) To eliminate all private traders
• d) To set international exchange rates

9. In marketing efficiency analysis, the term “price transmission” refers to:

• a) The lagged response of consumer demand to dietary changes
• b) How price changes at one market/location affect prices at another market/location
• c) The speed of electronic payments in wholesale markets
• d) The process of transmitting price information via radio only

10. Which of the following factors is LEAST likely to increase the marketing cost of a perishable horticultural crop?

• a) Lack of cold chain facilities
• b) Long distance to primary market
• c) Efficient grading and standardized packaging
• d) Multiple handling stages with many intermediaries

11. Grading in agricultural marketing primarily aims to:

• a) Increase the biological yield of crops
• b) Differentiate produce by quality to facilitate pricing and buyer choice
• c) Reduce soil erosion
• d) Replace packaging requirements

12. Which of the following best describes “monopsony” in an agricultural context?

• a) Many buyers, many sellers
• b) Single seller and many buyers
• c) Many sellers and single dominant buyer
• d) Government-controlled price fixing

13. Which marketing channel typically gives the highest share of retail price to producers (other things equal)?

• a) Producer → local collector → wholesaler → retailer → consumer
• b) Producer → processor → retailer → consumer
• c) Producer → cooperative collection & direct retail/contract sales → consumer
• d) Producer → exporter → foreign wholesaler → foreign retailer

14. Standardization in marketing primarily facilitates:

• a) International price volatility
• b) Easier comparison and trade across markets
• c) Increased post-harvest losses
• d) Decreased shelf-life of products

15. Which of the following is an example of forward marketing that reduces price risk for farmers?

• a) Spot sale at harvest
• b) Sale through a forward contract at a predetermined price
• c) Storing produce illegally to wait for higher prices
• d) Selling only to local middlemen without written agreement

16. A high marketing efficiency implies:

• a) Large marketing margins and high consumer prices
• b) Better services provided per unit of marketing cost
• c) Elimination of all intermediaries
• d) Lower agricultural productivity

17. Which of the following is typically a function of market information systems in agriculture?

• a) Increase information asymmetry between buyers and sellers
• b) Provide timely price and demand signals to farmers and traders
• c) Replace physical transport networks
• d) Control rainfall patterns using forecasts

18. Which of the following best explains the role of value addition in agricultural marketing?

• a) It reduces the product’s shelf life
• b) It increases the product’s worth through processing, grading, or packaging
• c) It primarily benefits only exporters
• d) It is irrelevant to consumer preferences

19. Which indicator would you use to measure spatial market integration between two markets?

• a) Correlation/co-integration of prices between the two markets
• b) Difference in rainfall patterns
• c) Number of local festivals
• d) Average farm size

20. Which of these is a common constraint faced by smallholder farmers in accessing markets?

• a) Lack of market information and poor transport
• b) Excessive access to formal credit at low interest
• c) Too many storage and cold-chain facilities close by
• d) Overregulation that simplifies market entry

21. Which of the following is a direct marketing channel that typically reduces the number of intermediaries?

• a) Producer → Retailer → Consumer
• b) Producer → Consumer (farm-gate or farmers’ market)
• c) Producer → Wholesaler → Retailer → Consumer
• d) Producer → Exporter → Foreign Retailer

22. Which of the following best describes “price support” as a policy tool?

• a) Government buying surplus to maintain farm prices
• b) Increasing import quotas
• c) Deregulating domestic market information
• d) Encouraging monopolistic traders

23. Which of the following methods is commonly used to compute marketing margin?

• a) Retail price minus producer price
• b) Producer price plus transportation cost
• c) Farm gate price times quantity produced
• d) Government support payments only

24. Which one is an example of vertical integration in agribusiness?

• a) A cooperative of smallholders pooling produce for collective sale
• b) A firm owning farms, processing plants and retail outlets
• c) Multiple traders operating independently in a market
• d) A government setting import tariffs

25. Which of the following reduces post-harvest losses most directly?

• a) Improved harvesting, handling, storage and cold chain facilities
• b) Increasing tariffs
• c) Limiting farmer cooperatives
• d) Virtual absence of grading

26. What does “price elasticity of demand” measure in agricultural marketing?

• a) How price responds to changes in supply
• b) The responsiveness of quantity demanded to a change in price
• c) The income level of consumers
• d) The cost of transportation per km

27. Which of the following best describes “horizontal integration” among farmers?

• a) A single firm controlling processing, distribution and retail
• b) Farmers of the same commodity pooling resources or coordinating production/marketing
• c) Traders opening branches in multiple countries
• d) Government forming a price stabilization fund

28. Which of the following is an indirect marketing cost?

• a) Transportation
• b) Storage losses
• c) Opportunity cost of farmer’s time spent in marketing
• d) Commission charges

29. Which of the following best explains “market failure” in agricultural markets?

• a) When markets operate perfectly without any externalities
• b) When private markets fail to allocate resources efficiently due to externalities, public goods or asymmetric information
• c) When producers always get full consumer price
• d) When there’s overabundance of storage facilities

30. Which of these tools is commonly used to stabilize prices and support farmers during bumper harvests?

• a) Government buffer stock operations
• b) Reducing irrigation facilities
• c) Eliminating all cooperatives
• d) Increasing post-harvest losses

31. Which statement about intermediaries in agricultural marketing is most accurate?

• a) Intermediaries always decrease farmers’ welfare
• b) Intermediaries perform functions like aggregation, risk-bearing and provide market access, but can also capture excessive margins if uncompetitive
• c) Intermediaries are irrelevant where road networks exist
• d) Intermediaries are always public sector entities

32. Which of the following is a consequence of lack of standard grades for a commodity?

• a) Easier comparison of quality across markets
• b) Difficulty in price negotiation and potential market distortions
• c) Improved export competitiveness
• d) Lower post-harvest losses

33. Which financing mechanism specifically links credit to a contracted buyer or processor?

• a) Input loans unrelated to sales
• b) Contract farming credit or buyer-linked credit
• c) Unsecured personal loans
• d) Export subsidies

34. Which of these is an advantage of regulated agricultural markets (APMC-type markets) historically?

• a) Guaranteed competition among buyers in a transparent auction place
• b) Guaranteed lower consumer prices always
• c) Permanent elimination of middlemen
• d) Increase in post-harvest spoilage

35. Which of the following best characterizes a futures market for an agricultural commodity?

• a) A market where immediate physical delivery is the only option
• b) A centralized marketplace for standardized contracts to buy/sell a commodity at a future date
• c) A method to increase transaction costs
• d) A guaranteed income scheme for farmers

36. Which of the following marketing practices can help smallholders capture greater value?

• a) Selling mixed, ungraded produce to anonymous traders
• b) Forming producer groups to access collective bargaining, grading and direct market linkages
• c) Avoiding certification and quality standards
• d) Destroying produce to reduce supply

37. The term “value chain” in agriculture refers to:

• a) Only production activities on the farm
• b) All activities from input supply, production, processing, marketing to retail that add value to a product
• c) The measurement of soil nutrients
• d) A chain used to bind sacks in markets

38. Which of the following is an effect of improved market infrastructure (roads, storage, cold chain) on farmers?

• a) Increased isolation from markets
• b) Reduced post-harvest losses and better price realization
• c) Lower bargaining power
• d) Increased perishability

39. Which of the following is a common reason for high price volatility in agricultural markets?

• a) Perishability, seasonality and inelastic short-run supply/demand
• b) Perfectly elastic supply at all times
• c) Fixed annual production across years
• d) Absence of any weather-related shocks

40. Which of the following best describes “contract farming”?

• a) Informal spot sales to local traders
• b) An arrangement where farmers produce according to buyer specifications under a contract
• c) Government purchase at MSP only
• d) Renting land for urban development

41. Which measure can improve farmers’ access to market information and reduce asymmetric information?

• a) Strengthening local market information systems and mobile-based price services
• b) Banning farmer access to market reports
• c) Prohibiting communication between buyers and sellers
• d) Limiting competition among traders

42. Which of the following is an example of non-price competition in agricultural marketing?

• a) Lowering the posted price below competitors
• b) Improving packaging, branding and quality differentiation
• c) Collusion to fix prices
• d) Reducing farm production area

43. Which of the following best describes “marketing efficiency” measured by the Palmer or Acharya method?

• a) Ratio of consumer price to marketing cost
• b) Ratio of value of output to marketing cost or ratio of net returns to marketing cost depending on formulation
• c) Measurement of rainfall per season
• d) Government expenditure on agriculture

44. Which approach reduces the number of transactions and improves farmers’ bargaining power?

• a) Encouraging individual fragmented sales
• b) Promoting aggregation through farmer producer organizations (FPOs) or cooperatives
• c) Discouraging storage facilities
• d) Increasing post-harvest handling by multiple agents

45. In an open market, which factor most directly lowers the share of producers in final consumer price?

• a) High efficiency in transport and fewer intermediaries
• b) High number of intermediaries capturing large margins relative to services provided
• c) Strong farmer cooperatives with direct market linkages
• d) Efficient grading and storage

46. Which policy instrument is most likely to encourage export-oriented agricultural production?

• a) Export subsidies or tax incentives for exporters
• b) High export tariffs
• c) Strict bans on export
• d) Removal of quality standards for export

47. What is the main purpose of contract specifications in contract farming?

• a) To increase ambiguity in transactions
• b) To clearly specify quality standards, delivery schedules and price terms
• c) To eliminate all forms of buyer responsibility
• d) To avoid any form of monitoring

48. Which of the following can improve farmers’ access to credit linked to marketing?

• a) Strengthening warehouse receipt systems that allow collateralized loans
• b) Prohibiting receipts for stored produce
• c) Ignoring storage infrastructure
• d) Increasing information asymmetry

49. Which of the following marketing reforms typically aims to increase competition and reduce barriers to trade for farmers?

• a) Allowing trade outside regulated market yards and promoting private markets
• b) Restricting sales only to a single licensed trader
• c) Increasing licensing fees for new traders
• d) Mandating only in-person auctions

50. Which of these is a critical success factor for integrating smallholders into high-value supply chains?

• a) Access to quality inputs, extension, quality standards compliance and assured market linkages
• b) Total isolation from buyers and processors
• c) Avoiding certification or traceability systems
• d) Frequent crop destruction to reduce supply