Transfer earnings – the payment which is necessary to keep a factor of production in its present
use/employment, (hence preventing it from transferring to another use.) Transfer earnings are
determined by what a factor of production could have earned in its next best alternative employment –
thus it?s the opportunity cost of putting or keeping a factor of production in its present use.
Economic rent is the payment made to a factor of production over and above that which is necessary to
keep it in its current use. Take an example of a doctor who is earning Ksh. 40,000 per month in the
private sector; if the same doctor would be paid Ksh. 30,000 per month in the public sector and assuming
all other working conditions of service are the same, transfer earnings would be Kshs. 30,000 per month,
as this is the minimum amount of payment necessary to keep the doctor in the present (private) sector.
The doctor is then earning an economic rent of Kshs. 10,000 that is (40,000 – 30,000) per month
Wilfykil answered the question on February 6, 2019 at 09:46
-
A monopoly firm is faced with the following demand function
P = 13 – 0.5Q
The Marginal Cost function for the firm is given by 3 +...
(Solved)
A monopoly firm is faced with the following demand function
P = 13 – 0.5Q
The Marginal Cost function for the firm is given by 3 + 4Q and the total fixed cost is 4.
Determine the output level at the break-even point.
Date posted:
February 6, 2019
.
Answers (1)
-
A monopoly firm is faced with the following demand function
P = 13 – 0.5Q
The Marginal Cost function for the firm is given by 3 +...
(Solved)
A monopoly firm is faced with the following demand function
P = 13 – 0.5Q
The Marginal Cost function for the firm is given by 3 + 4Q and the total fixed cost is 4.
Determine the level of super-normal profit if any.
Date posted:
February 6, 2019
.
Answers (1)
-
Illustrate and explain the short-run supply curve of a firm in perfect competition
(Solved)
Illustrate and explain the short-run supply curve of a firm in perfect competition
Date posted:
February 6, 2019
.
Answers (1)
-
Explain why a firm in perfect competition may continue in the production of goods which it
can only sell at a loss and why it cannot...
(Solved)
Explain why a firm in perfect competition may continue in the production of goods which it
can only sell at a loss and why it cannot continue doing this indefinitely
Date posted:
February 6, 2019
.
Answers (1)
-
Write explanatory notes on the various types of internal and external economies of scale.
(Solved)
Write explanatory notes on the various types of internal and external economies of scale.
Date posted:
February 6, 2019
.
Answers (1)
-
Using a well-illustrated diagram, show that a monopolist can make losses in the short-run even
when MC = MR
(Solved)
Using a well-illustrated diagram, show that a monopolist can make losses in the short-run even
when MC = MR
Date posted:
February 6, 2019
.
Answers (1)
-
Using a well illustrated diagram, explain why prices are "sticky" downwards under an
oligopolistic market structure
(Solved)
Using a well illustrated diagram, explain why prices are "sticky" downwards under an
oligopolistic market structure
Date posted:
February 6, 2019
.
Answers (1)
-
Explain the meaning of mobility of factors of production. To what extent are factors of
production mobile?
(Solved)
Explain the meaning of mobility of factors of production. To what extent are factors of
production mobile
Date posted:
February 6, 2019
.
Answers (1)
-
If Mrs. Breader views butter and margarine as perfect substitutes, draw a set of indifference
curves that describe her preference for these two commodities
(Solved)
If Mrs. Breader views butter and margarine as perfect substitutes, draw a set of indifference
curves that describe her preference for these two commodities
Date posted:
February 6, 2019
.
Answers (1)
-
Explain any four uses of indifference curve analysis
(Solved)
Explain any four uses of indifference curve analysis
Date posted:
February 6, 2019
.
Answers (1)
-
Briefly explain two exceptions to the definition of an indifference curve.
(Solved)
Briefly explain two exceptions to the definition of an indifference curve.
Date posted:
February 6, 2019
.
Answers (1)
-
Explain the main characteristics of indifference curves
(Solved)
Explain the main characteristics of indifference curves
Date posted:
February 6, 2019
.
Answers (1)
-
Illustrate and explain Consumer equilibrium under the ordinalist approach
(Solved)
Illustrate and explain Consumer equilibrium under the ordinalist approach
Date posted:
February 6, 2019
.
Answers (1)
-
Illustrate and explain Consumer equilibrium under the cardinalist approach
(Solved)
Illustrate and explain Consumer equilibrium under the cardinalist approach
Date posted:
February 6, 2019
.
Answers (1)
-
Define marginal utility and clearly explain the oxiom of diminishing marginal utility.
(Solved)
Define marginal utility and clearly explain the oxiom of diminishing marginal utility.
Date posted:
February 6, 2019
.
Answers (1)
-
Given the following table: What type of goods are X, Y, Z & W and why?
(Solved)
What type of goods are X, Y, Z & W and why?
Date posted:
February 6, 2019
.
Answers (1)
-
With the aid of diagrams, explain the importance of the concept of elasticity of supply.
(Solved)
With the aid of diagrams, explain the importance of the concept of elasticity of supply.
Date posted:
February 6, 2019
.
Answers (1)
-
The managing director of My Kori-Lima Movie Theater Ltd has hired you as a consultant to
advise on the ticket – pricing strategy. As a basis...
(Solved)
The managing director of My Kori-Lima Movie Theater Ltd has hired you as a consultant to
advise on the ticket – pricing strategy. As a basis for your recommendations you consider historical
ticket sales data which seems to suggest the following ticket – sales elasticities:
Own – price elasticity = -0.05
Refreshment price elasticity = -0.12
Nairobi Population elasticity = +0.65
Advertising elasticity = +0.70
The managing director is contemplating a moderate increase in the advertising budget in order to
increase revenue. Is this a good idea? Explain.
Date posted:
February 4, 2019
.
Answers (1)
-
The managing director of My Kori-Lima Movie Theater Ltd has hired you as a consultant to
advise on the ticket – pricing strategy. As a basis...
(Solved)
The managing director of My Kori-Lima Movie Theater Ltd has hired you as a consultant to
advise on the ticket – pricing strategy. As a basis for your recommendations you consider historical
ticket sales data which seems to suggest the following ticket – sales elasticities:
Own – price elasticity = -0.05
Refreshment price elasticity = -0.12
Nairobi Population elasticity = +0.65
Advertising elasticity = +0.70
The managing director is contemplating a moderate increase in ticket prices in order to increase revenue.
Explain whether this is a good idea
Date posted:
February 4, 2019
.
Answers (1)
-
Given that:
QX = 9 – ½ P2
QY = 8P + ½ P2
Identify which of the two functions is a demand and a supply function
(Solved)
Given that:
QX = 9 – ½ P2
QY = 8P + ½ P2
Identify which of the two functions is a demand and a supply function
Date posted:
February 4, 2019
.
Answers (1)