Andnet Business and Technology College

Department of Accounting & Finance

Economics Assignment
1. Explain briefly the following concepts.
A) Utility B)Indifference curve C)Law of diminishing marginal utility
D)Budget line E)Consumer preference F)Marginal rate of substitution
2. What is the basic difference between cardinal and ordinal approaches of utility?
3. Elaborate the justifications for the negative slope and convexity of indifference curve.
4. Standard indifference curves cannot intersect each other. Why?
5. Does the change in income affect the slope of the budget line? Explain.

1. A person has $ 100 to spend on two goods X and Y whose respective prices are $3 and $5.
A. Draw the budget line.
B. What happens to the original budget line if the budget falls by 25%?
C. What happens to the original budget line if the price of X doubles?
D. What happens to the original budget line if the price of Y falls to $4?

2. A rational consumer spends all of her income on two goods: Apple and Banana.
Suppose the last dollar spent on Apple increased her total utility from 60 utils to 68 utils
and the last dollar spent on Banana increased her total utility from 25 utils to 29 utils. If
the price of a unit of Apple is 2 Birr, what is the price of a unit of Banana at equilibrium?
3. Given utility function U= where PX = 12 Birr, Birr, PY = 4 Birr and the income of the
consumer is, M= 240 Birr.
A. Find the utility maximizing combinations of X and Y.
B. Calculate marginal rate of substitution of X for Y (MRSX,Y) at equilibrium and interpret
your result.
4. Suppose a particular consumer has 8 birr to be spent on two goods, A and B. The unit price
of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from
consumption of the goods is given below.
Quantity
1 36 30
2 24 22
3 20 16
4 18 12
 5 16 10
6 10 4

A. Based on the cardinal analysis, what is the combination of the two goods that gives
maximum utility to the consumer?
What is the total utility at the utility maximization level?

Part II: Discussion questions

1. Compare and contrast the following concepts.
a) Explicit cost and implicit cost b)Economic cost and accounting cost
2. What is the main difference between fixed inputs and variable inputs?
3. Explain the law of variable proportions.
4. Which stage of short run production is efficient? Why?
5. Show the relationship between short-run MC and MPL both mathematically
and graphically.
6. Can accounting cost be greater economic cost? Explain.
7. The short run AVC, AC and MC are all U-shaped. Why?

1. Suppose the production function is given by Q(L,K) = L 4 K 4 . Assuming capital is fixed,

find APL and MPL.

2 Consider the following short run production function:

Q=6L2 -0.4L3
A. Find the value of L that maximizes output
B. Find the value of L that maximizes marginal product
C. Find the value of L that maximizes average product

3. Given a short run cost function as TC= 1/3Q3-2Q2+60Q+100, find the minimum value of
AVC and MC.
 Andnet Business and Technology College
Department of Accounting & Finance
Fundamentals of Accounting I

Individual Assignment Part I

John wants to operate taxi service in logia and started the business on March first of 2008. The
following transactions were took place for the month of March:

March 1 - John invested the following assets for the business to be effective by borrowing
$4,000 cash from his friend and $5,000 cash of his own; account receivable $1,500;
supplies $950; and Minibus that cost $80,000.

March 2 - Purchased gasoline, oil and other supplies of $4,500 from Mobil Gas Station, John
agreed to pay $1,500 after two weeks and paid the remaining amount.

March 3 - Taxi service provided for customers and received $6,200 cash.

March 10 – John paid $900 for driver’s salary.

March 15 - Taxi service provided for customers on account totaled $2000.

March 17 - John paid for Mobil Gas Station the unpaid amount of money that was occurred on
March 2 transactions.

March 20 - Paid $ 850 for driver salary

March 21 - John received $1,500 of his receivable that has been invested on March 1.

March 23 – The Minibus maintained in garage and John paid $420 cash for maintenance.

March 31 - John withdrew $1,500 for his personal use.

Instructions

1. Journalize the transactions that have been took place from the month of March 1 up to 31.
2. Prepare ledger
3. Prepare trial balance
4. Journalize the following adjusting entries as of March 31, 2008.
a. The inventory of supplies determined that $2000 is on hand.
b. Depreciation on Minibus during the month of March estimated $536.
c. Salary accrued but not paid at March 31, 2008 is $300.
5. Prepare work sheet.
6. Prepare all financial statements that can be made through the help of work sheet.
7. Journalize closing entries as of March 31, 2008.
8. Prepare post closing trial balance.

Part II

1) The bank statement for XYZ Company indicates the balance of $10500 as of April 30. The
balance of March 31 from the bank reconciliation of preceding month is $9500 and total of cash
in bank debit column from cash receipt journal for month of April is $6250. From the check
register the total amount of checks issued in April is $8000. A deposit of $2250, representing
receipts of April 30 had been too late to appear on the bank statement .Checks outstanding
totaled $770. The bank memorandums accompanying April bank statement shows a bank credit
memo for note collected, a principal of $4500 and interest of $100 and bank debit memo for
check returned because of insufficient funds $360 and bank debit memo for service charge $28.
A deposit of $286.20 had been erroneously recorded by the depositor as $268.20; assume that all
deposits are from cash sales.

Instruction
a) Prepare bank reconciliation for April 30.

b) Journalize the necessary journal entries.

2) Assume that a 90 day, 8% notes receivable for $1700 dated February 4 is discounted at a bank
on March 21 at rate of 10%.Based on the above data find

A) The Maturity value of the note

B) Discounting period

C) The amount of discount on Maturity value

D) Proceeds