a. The cost of producing yams may be classified into two: fixed costs (e.g., land rent, unchanging with output) and variable costs (e.g., labor and seeds, varying with output). In Ghanaian banking, this informs cost analysis for agribusiness loans at banks like Access Bank Ghana, ensuring borrowers’ viability under BoG’s credit risk guidelines.

b. Marginal cost is calculated as the change in total cost divided by the change in quantity produced (MC = ΔTC / ΔQ). For example, if producing one more yam increases total cost from GH¢100 to GH¢105, MC is GH¢5. Banks use this in profitability assessments for manufacturing clients, aligning with Basel II/III adapted principles in Ghana.

c. At zero units of production, the fixed cost equals the total cost, as there are no variable costs incurred. This relationship is crucial for startup financing in Ghana, where banks like Ecobank evaluate fixed costs (e.g., machinery) against projected revenues per BoG’s recapitalization notices.

d. Four main features of free competition include:

• Large number of buyers and sellers: Preventing any single entity from influencing prices, as in Ghana’s open markets for goods like tomatoes.
• Homogeneous products: Identical offerings, allowing perfect substitutability.
• Free entry and exit: No barriers, enabling new firms to enter profitable markets.
• Perfect information: All participants know prices and quality, fostering efficiency; in banking, this mirrors competitive retail services post-2017 cleanup.