Answer to Question #125515 in Microeconomics for Abdul Razak

Question

Using the consumption and saving pattern of households in Table 1, compute their
average and marginal propensities (24 marks)
Table 1 Consumption and Saving Schedules (in millions of cedis)
Income C S APC APS MPC MPS
270 280 -10
300 300 0
330 320 10
360 340 20
390 360 30
420 380 40
450 400 50
480 420 60
510 440 70
540 460 80
570 480 90
600 500 100
Note: ‘C’ and ‘S’ stand for consumption saving respectively
(b) From the values calculated, what relationship can you observe between APC and APS? (1
mark)
Question 2
(a) Explain the components of gross domestic product (GDP) (10 marks)
(b) With illustration, explain the concept of Production Possibility Frontier (15 marks)
Question 3
(a) Name three things that firms need to know in order to maximise profit and minimise
cost (10 marks)
(b) State and explain five important distinctions between financial analysis and economic

Answer 1

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