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SS2: ECONOMICS - 1ST TERM

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  1. Basic Tools for Economic Analysis I | Week 1
    5 Topics
  2. Basic Tools for Economic Analysis II | Week 2
    3 Topics
    |
    1 Quiz
  3. Theory of Demand | Week 3
    4 Topics
    |
    1 Quiz
  4. Theory of Supply | Week 4
    4 Topics
    |
    1 Quiz
  5. Theory of Production Possibility Curve I | Week 5
    1 Topic
  6. Theory of Production Possibility Curve II | Week 6
    4 Topics
    |
    1 Quiz
  7. Theory of Cost I | Week 7
    2 Topics
  8. Theory of Cost II | Week 8
    3 Topics
    |
    1 Quiz
  9. Revenue Concept | Week 9
    2 Topics
    |
    1 Quiz

Quizzes




  • Kofa Study
SS2: ECONOMICS – 1ST TERM Theory of Cost II | Week 8 The Distinction between Economist’s and Accountant’s View of Cost
Lesson 8, Topic 3
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The Distinction between Economist’s and Accountant’s View of Cost

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Topic Content:

  • The Distinction between Economist’s and Accountant’s View of Cost

To the accountant, cost is the total amount of money spent to obtain something. If ₦50 is spent to obtain a commodity, for an accountant, the cost of the commodity is ₦50.00. This is what is known as the money cost or the explicit cost which includes expenses on wages, raw materials, and other out payments made by a producer and recorded in the accountant book. This concept of cost is usually presented in money terms

 

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Solution:

Complete the cost schedules

Unit of output TFC TVC TC AC MC
1 100 50 K 150 –
2 A 100 200 100 G
3 B 140 240 80 40
4 C 170 270 D H
5 100 210 310 E I
6 100 270 L F J

Solution:

TFC = TC – VC

A = ₦200 – ₦100 = ₦100

B = ₦240 – ₦140 = ₦100

C = ₦270 – ₦170 = ₦100

AC = \( \frac{TC}{Q} \)

D = \( \frac{270}{4} \)

= ₦67.50k

E = \( \frac{310}{5} \)

= ₦62

F = \( \frac{370}{6} \)

= ₦61.67

TC = TFC + TVC

L = ₦270 + ₦100 = ₦370

K = ₦100 + ₦50 = ₦150

MC = \( \frac{\Delta TC}{\Delta Q}  \)

or \( \frac{TC_2 \: – \: TC_1}{Q_2 \: – \: Q_1}  \)

 

G = \( \frac{200 \: – \: 150}{2 \: – \: 1} \\ = \frac{50}{1} \\ = \scriptsize  N50 \)

 

H = \( \frac{270 \: – \: 240}{4 \: – \: 3} \\ = \frac{30}{1} \\ = \scriptsize  N30 \)

 

I = \( \frac{310 \: – \: 270}{5 \: – \: 4} \\ = \frac{40}{1} \\ = \scriptsize  N40 \)

 

J = \( \frac{370 \: – \: 310}{6 \: – \: 5} \\ = \frac{60}{1} \\ = \scriptsize  N60 \)

 

Unit of output TFC TVC TC AC MC
1 100 50 K 150 –
2 100 100 200 100 50
3 100 140 240 80 40
4 100 170 270 67.5 30
5 100 210 310 62 40
6 100 270 370 61.7 60

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