Economics Paper 2, Nov/Dec. 2021

Question 2

Table 2 below shows the assets, income and tax obligations of a retired worker. Use the data to answer the questions that follow.

Table 2

ITEM	VALUE($)
Annual Pension Value of House owned Annual Rent from House Value of School owned Annual Profit from School Annual Income Tax Property Tax per year Value of Taxi owned Yearly Profit from Taxi	40,000 200,000 48,000 550,000 35,000 33,500 10,000 17,500 23,000

(a) Calculate his:

annual total income;
annual disposable income;
total value of capital assets.

(b) Compute his disposable income per month.
(c) If he pays 15% of his annual disposable income to the social welfare as his social responsibility, how much is left?

Observation

This is the alternative data response question to question 1 and it was attempted by few candidates, majority of whom scored below average marks. The question required candidates to calculate the annual total income, annual disposable income and total value of capital assets of the retired worker in the (a) part of the question. The candidates were also required to compute his disposable income per month and the value of his annual disposable income that remains after paying 15% of his annual disposable income to social welfare in the (b) and (c) parts of the question respectively. Few of the candidates were able to calculate the annual total income, annual disposable income and total value of capital assets of the retired worker in the (a) part of the question; majority of them were unable to distinguish between total income and disposable income. Most candidates were unable to compute his monthly disposable income and the value of his annual disposable income that remains after paying 15% of his annual disposable income to social welfare in the (b) and (c) parts of the question respectively.

The candidates were expected to provide the following answers to obtain the maximum marks.

(a)(i)    Annual total income
                 =     $ 40,000 + $ 48,000 + $ 35,000 + $ 23,000
=     $ 146,000

(ii)   Annual disposable income
=     $ 146,000 – ($ 33,500 + $ 10,000)
=     $ 146,000 – $ 43,500
                 =     $ 102,500

(iii) Total value of capital assets
                 =     $ 200,000 + $ 550,000 + $ 17,500
=     $ 767, 500

(b)        Annual disposable income
12
=          $ 102,500
12
=          $ 8541.67 / $8541.7 / $8542

(c)        15   × $ 102,500     = $ 15,375
100
= $ 102,500 - $ 15, 375   = $ 87,125