Category: Economics

➤ How do I compute the annualized capital cost (capital recovery) at 10% for each option?
Apply the capital recovery formula A = P·[i(1+i)^n/((1+i)^n−1)]. At 10%, n=4 gives A/P ≈ 0.31547, so A’s recovery = 3500×0.31547 ≈ Rs 1,104. For n=6, A/P ≈ 0.22960, so B’s recovery = 5000×0.22960 ≈ Rs 1,148. Subtract these from net annual income.

➤ How do you calculate each side’s share of a subsidy using elasticities?
Use supply and demand elasticities. Consumer share ≈ Es / (Es + |Ed|), and producer share ≈ |Ed| / (Es + |Ed|), where Es is supply elasticity and |Ed| is the absolute value of demand elasticity. Plug in point or arc elasticities to estimate how a per‑unit subsidy divides between buyers and sellers.

➤ Why do incentives sometimes lead to unintended complaints or negative culture?
Incentives that focus only on speed or outputs can encourage gaming the system. That creates shortcuts, lower quality, and more complaints. Misaligned metrics and weak oversight produce perverse incentives. Use balanced scorecards, quality checks, and feedback loops to protect service standards and discourage harmful behavior.

If an accountant makes $80,000 and after deductions pays $8,000 in taxes while an administrative assistant makes $35,000 and after deductions pays $2,000 in taxes, this is an example of
Marginal inequilty.
Horizontal equity.
Vertical equity.
Effective inequilty.

Question 131 ptsThe following linear trend equation was developed for annual sales from 2005 to 2009, with 2005 as the base year (regression equation value =1 ). hat(Y)=500 60t (in $thousands). What are the estimated sales for 2010 (in $thousands)?
◻ $500
$860
$1,040
$1,100

➤ Why is delivery important in a sale of goods?
Delivery marks when the buyer obtains possession and often when title and risk of loss pass. It triggers obligations like payment, inspection, and acceptance. Clear delivery prevents disputes about ownership, breach, and insurance claims. The method—actual, constructive, or carrier delivery—affects when legal responsibilities shift between seller and buyer.

Investment, as defined in national income accounts, would include:Question 11Select one:
a. additions to business inventories.
b. purchases of shares of stock in corporate businesses.
c. personal consumption expenditures on durable goods.
d. government construction of new highways