Economics Answers

The trational methods of cost allocation, cost apportionment and absorption into products are being challenged by some writters who claim that much information given to management is misleading when these methods of dealing with fixed overheads are used to determine product costs.
You are required to explain what is meant by cost allocation costs apportionment and absorption and to describe briefly the alternatives approach of activity-based costing in order to ascertain total product costs.

You have been appointed as an economic advisor to the principle of Bright Sparks College, a firm operating in the market for tertiary education. Over the past 18 months the following simultaneous changes have been noticed in the market for tertiary education:  A decrease in consumer income;  An increase in the cost of providing tertiary education services. Explain, with the aid of a graph, the impact of the above changes on the equilibrium price and equilibrium quantity in the tertiary education market. (Note: Seven marks for a graph and 8 marks for the explanation.) Marks will be awarded for your ability to integrate theory with the scenario provided.

a) Let a doctor earns $20 per hour, a plumber $ 5 per hour, and a professor $ 10 per hour.
Everything else the same, which one will devote more hours to negotiating the price of a
new car? Explain

Graph a typical isoquant curve for the following production functions and determine whether they have convex indifference curves. Also calculate MRTS for each of the following functions
Q(x,y)=3x+y
Q(x,y)=√(x.y)
Q(x,y)=√x+ y

Suppose there are 2 goods X (inferior good) and Y (normal good). Assume there is increase in price of good X, draw and explain the decomposition of price effect (of increased price of inferior good) in substitution and income effect.

Suppose utility function is given by U(x,y) = x0.3y0.7 subject to budget constraint I= Pxx + Pyy. Further suppose that the prices for those goods given by Px=1 Py=2 & I=2. Derive demand function of good x and good y

6. The level of output that can be sustained in the long run is called …. Output (a) potential (b) projected (c) expected (d) possible
7. The basic Automatic Stabilizers is/are: (a) Transfer payments (b) Unemployment compensation (c) Income taxes (d) All of the above
8. The market price of bonds can fluctuate depending on …. (a) how many bonds were sold (b) who bought the bonds (c) the amount of coupon (d) the interest rate
9. If the economy is in a recession, the Central Bank could do all of the following except …. (a) Buy securities (b) Lower the Discount rate (c) Lower the Monetary Policy rate (d) Lower taxes
10. If the Aggregate Supply is vertical in the long run neither monetary policy nor fiscal policy has any effect on aggregate output (a) True (b) False

4. The International Bank for Reconstruction and Development (IBRD) is also known as ….. (a) World Bank (b) IMF (c) African Development Bank (d) African Finance Corporation
5. Expansionary Fiscal policy is aimed at promoting: (a) Income redistribution and social justice (b) Full restoration of the economy from financial crisis (c) Output expansion and full employment (d) Price stability and product expansion