UNIVERSITY OF EDUCATION, WINNEBA DEPARTMENT OF ECONOMICS EDUCATION Time allowed: 2 Hours Maximum Marks: 60 ECNS 481: ADVANCED ECONOMIC THEORY END OF SECOND SEMESTER EXAMINATION, 2020/2021 SECTION A (Answer all questions in this section. Please circle the right answer on the question paper). 1. In the Ghanaian economy, if the price of labour is GhC100 and the price of capital is GhC80 for producing cocoa and coffee, then the input efficiency requires that the marginal: (1 mark) A. product of labour is 100 in the cocoa factory, and the marginal product of capital is 80 in the gold factory. "B. rate of technical substitution of labour for capital is 100 in the cocoa factory and 80 in the gold factory. C. product of labour equals the marginal product of capital in the cocoa factory and in the gold factory. D. rate of technical substitution of labour for capital is 1.25 in the cocoa factory and in the gold factory. 2. If the marginal rate of technical substitution (MRTS) is equal to 2, then that means that A. I additional unit of labor increases output produced by 2 units. (1 mark) B. I unit of labors is only half as productive as I unit of capital. C. 2 units of labor replace I unit of capital with no change in output produced. D. I unit of labor replaces 2 units of capital with no change in output produced. 3. The cost of search in the event of information assymentry may include (1 mark) A. time spent to learn the properties of the product, B. time spent to compare the product to possible substitutes, C. time spent to find lower-price sellers of the product, D. money spent to purchase information on the product, E. all of the above. Wishing you all the best