Economics Answers

Ben earns by giving guitar lessons at 20 per hour. If he spends 10 hours planting ornamental plants and buys 100 worth of pots and cuttings, ehat are the opportunity costs? Compute the accounting profit and economic profit if Ben sold the plants at 200.

a) How is money supply different in a fixed compared to a flexible exchange rate system? b) Explain why does monetary policy lose autonomy in a fixed exchange rate system ? c) Explain the assumptions of flexible exchange rate and fixed exchange rate. Which is an appropriate system for an small island economy of the Pacific ? 

Suppose nominal wages never changed. What would be the significance of such a characteristic?

Give three reasons for the downward slope of the aggregate demand

curve.

4. How would an increase in the supply of labor affect the natural level of employment and potential output? How would it affect the real wage, the level of real GDP, and the price level in the short run? How would it affect long-run aggregate supply? What kind of gaps would be created

1. Assume that price of good X (Px2) will become P5.00 per unit while B1 and Py1 remain the same. What is the new combination of goods X and Y the consumer should purchase in order to be at equilibrium?

1. Suppose the consumer’s budget (B1) is P50.00 and the price per unit of Good X (Px1) is P10.00 and the price per unit of Good Y (Py1) is P5.00. How many units of goods X and Y the consumer should buy in order to be an equilibrium? How many will be the consumer’s total utility from this combination of goods X and Y?

The company purchased furniture and fixtures to use in one of its stores for 440,000 in January of 20X5. The furniture and fixtures were being depreciated using the straight-line method over ten years with a residual value of 10,000. In December 20X9, Gameplay decided to close the location and entered into an exchange agreement with Allero Corporation. Allero agreed to give Gameplay vehicles with a fair value of 200,000 and cash of 50,000 in exchange for the furniture and fixtures from this store. The furniture and fixtures have an estimated fair value of 250,000 on the date of exchange. a. Make the depreciation entry for the furniture and fixtures that would be necessary in December 20X9, assuming that no entries have been made during the year. b. Determine the book value of the furniture and fixtures on the date of exchange. c. Record the journal entry Gameplay would make for this exchange. d. Where would Gameplay report the gain or loss you determined in part c. above?

Springfield Corporation purchases a new machine on March 3, 20X4 for $35,600 in cash. It pays an additional $3,400 to transport and set up the machine. Springfield’s accountant determines that the equipment has no residual value and that the useful life is five years. It is expected to generate 2,400,000 units during its life. Assume Springfield employs the half-year convention. 

a. Record the purchase of the machine.

b. Assume that Springfield uses the straight-line method of depreciation. Record depreciation expense for the first two years of the machine’s life. 

c. Assume that Springfield uses the double-declining balance method of depreciation. Record depreciation expense for the first two years of the machine’s life. 

d. Assume that Springfield uses the units-of-production method of depreciation. 

During Year 1, the machine produces 600,000 units. 

During Year 2, the machine produces 578,000 units. 

Record depreciation expense for the first two years of the machine’s life

In Bennett’s Ltd three types of jobs are performed in separate production departments E, F, and G. In addition, there are two service departments A and B. indirect labour costs and other indirect expenses for Bennett’s Ltd, have been allocated to departments as follows:

Production departments Service departments

                   E      F     G

Indirect labour    5000 7000   9000

Other indirect exp. 2000  4000  6000

                 7000 11000 15000                    A        B

 Indirect labour   2000     3000 

Other indirect exp. 3000     4000

                 5000     7000

The expenses of the service departments are to be allocated between other departments as follows:

Dept. A to Depts. E 30%; F 25%; G 35%; B 10%

Dept. B to Depts. E 35%; F 29%; G 36%

In departments E and F the job costing is to use an overhead rate per direct labour, while in G an overhead rate per machine hour rate is used. The number of direct hours and machine hours per department is expected to be: