2(a) (i) Fixed cost = 100
*Reason*:
Total fixed cost = Total cost – Total variable cost
*At output level 4,*
Total fixed cost = 340 – (60×4)
Total fixed cost = 340 – 240 = *100*
(aii) *At output level 2,*
Total cost = Total fixed cost + Total variable cost
P = 100 + (2 × 60)
P = 100 + 120
P = 220
*At output level 5,*
Total cost = Total fixed cost + Total variable cost
Q = 100 + (5 × 70)
Q = 100 + 350
Q = 450
*At output level 1,*
Total variable cost = Total cost – Total fixed Cost
(R × 1) = 190 – 100
R = 90
*At output level 3,*
Total variable cost = Total cost – Total fixed Cost
(S × 3) = 250 – 100
3S = 150
S = 150/3
S = 50
*Marginal cost(level 2) = Total cost(level 2) – Total cost(level 1)*
T = P – 190
T = 220 – 190
T = 30
b (i) Decreasing: Levels 1, 2 and 3
Increasing: Levels 4 and 5
(c) The relationship between the average variable cost plotted on the vertical axis and the marginal cost on the horizontal axis is a curve which slopes downwards and then gradually rises upward
5a)
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of depts in a particular country or socio-economic context.
5b)
-portability
-divisibility
-limited supply
5c)
- *Transaction demand*: The amount of money needed to cover the needs of an individual, firm, or nation. That is, transaction demand for money is a measure of how much of a certain currency people need in order to buy the goods and services they use.
- *Precautionary demand*: Precautionary demand is the demand for financial assets, such as securities, money or foreign currency; it is money people hold in case of emergency.
- *Speculative demand*: is the demand for financial assets, such as securities, money, or foreign currency, that is not dictated by real transactions such as trade or financing.
==================
6a)
Central Bank can be defined as a national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency.
6b)
- *Open-Market Operations*: is by far the most important. By buying or selling government securities (usually bonds), the Fed—or a central bank—affects the money supply and interest rates.
- *The Discount Rate*: is the interest rate at which the Fed (or a central bank) lends to commercial banks. An increase in the discount rate reduces the amount of lending made by banks.
- *Reserve Requirements*: Commercial banks by law hold a specific percentage of their deposits and required reserves with the Fed (or a central bank). These are held either in the form of non-interest-bearing reserves or as cash.
6c)
- *Provide safety and security*: Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event.
- *Generates financial resources*: Insurance generate funds by collecting premium. These funds are invested in government securities and stock.
- *Life insurance encourages savings*: Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment.
*Question 3*
(a) A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture, each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.
(b) ¶ A public corporation is entirely owned and controlled by the government while a public
company is owned and controlled by shareholders (individuals)
¶ The aim of a public corporation is to provide essential goods and services which government
makes available to everybody with little or no charge while that of a public company is to
make profit for their share holders
¶ A public corporation come into existence through either decree or acts of parliament while
a public company come into existence through incorporation
¶ A public corporation has a very huge amount of capital which is provided by government as
compared with a public company whose relatively small capital is provided by shareholders
(c) ¶ Internally generated revenue
¶ Grant from foreign countries
¶ Grant from international financial institution
¶ Loans and Overdraft
===============
*Reason*:
Total fixed cost = Total cost – Total variable cost
*At output level 4,*
Total fixed cost = 340 – (60×4)
Total fixed cost = 340 – 240 = *100*
(aii) *At output level 2,*
Total cost = Total fixed cost + Total variable cost
P = 100 + (2 × 60)
P = 100 + 120
P = 220
*At output level 5,*
Total cost = Total fixed cost + Total variable cost
Q = 100 + (5 × 70)
Q = 100 + 350
Q = 450
*At output level 1,*
Total variable cost = Total cost – Total fixed Cost
(R × 1) = 190 – 100
R = 90
*At output level 3,*
Total variable cost = Total cost – Total fixed Cost
(S × 3) = 250 – 100
3S = 150
S = 150/3
S = 50
*Marginal cost(level 2) = Total cost(level 2) – Total cost(level 1)*
T = P – 190
T = 220 – 190
T = 30
b (i) Decreasing: Levels 1, 2 and 3
Increasing: Levels 4 and 5
(c) The relationship between the average variable cost plotted on the vertical axis and the marginal cost on the horizontal axis is a curve which slopes downwards and then gradually rises upward
5a)
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of depts in a particular country or socio-economic context.
5b)
-portability
-divisibility
-limited supply
5c)
- *Transaction demand*: The amount of money needed to cover the needs of an individual, firm, or nation. That is, transaction demand for money is a measure of how much of a certain currency people need in order to buy the goods and services they use.
- *Precautionary demand*: Precautionary demand is the demand for financial assets, such as securities, money or foreign currency; it is money people hold in case of emergency.
- *Speculative demand*: is the demand for financial assets, such as securities, money, or foreign currency, that is not dictated by real transactions such as trade or financing.
==================
6a)
Central Bank can be defined as a national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency.
6b)
- *Open-Market Operations*: is by far the most important. By buying or selling government securities (usually bonds), the Fed—or a central bank—affects the money supply and interest rates.
- *The Discount Rate*: is the interest rate at which the Fed (or a central bank) lends to commercial banks. An increase in the discount rate reduces the amount of lending made by banks.
- *Reserve Requirements*: Commercial banks by law hold a specific percentage of their deposits and required reserves with the Fed (or a central bank). These are held either in the form of non-interest-bearing reserves or as cash.
6c)
- *Provide safety and security*: Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event.
- *Generates financial resources*: Insurance generate funds by collecting premium. These funds are invested in government securities and stock.
- *Life insurance encourages savings*: Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment.
*Question 3*
(a) A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture, each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.
(b) ¶ A public corporation is entirely owned and controlled by the government while a public
company is owned and controlled by shareholders (individuals)
¶ The aim of a public corporation is to provide essential goods and services which government
makes available to everybody with little or no charge while that of a public company is to
make profit for their share holders
¶ A public corporation come into existence through either decree or acts of parliament while
a public company come into existence through incorporation
¶ A public corporation has a very huge amount of capital which is provided by government as
compared with a public company whose relatively small capital is provided by shareholders
(c) ¶ Internally generated revenue
¶ Grant from foreign countries
¶ Grant from international financial institution
¶ Loans and Overdraft
===============
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