(a) Two advantages of the price mechanism are:

• It efficiently allocates resources by signaling producers to increase supply when prices rise due to high demand, and vice versa.
• It encourages innovation and competition, as higher prices incentivize firms to improve efficiency or enter markets.

(b) Two factors that determine price elasticity of supply are:

• Availability of inputs or resources; if readily available, supply is more elastic.
• Time period; in the long run, supply tends to be more elastic as firms can adjust production capacity.

(c) The firm’s explicit costs are the actual monetary payments made for inputs, such as wages for labor, rent for premises, raw materials, and interest on loans, which are recorded in accounting books.

(d) The fixed cost and the variable cost of production are collectively termed total cost.

(e) Profit level = Total Revenue – Total Cost = (Price × Quantity) – (ATC × Quantity) = (GHC10 × 20) – (GHC5 × 20) = GHC200 – GHC100 = GHC100.

In Ghanaian banking, explicit costs like interest expenses on deposits are crucial for profitability analysis; post-2017 cleanup, banks like Stanbic Ghana focused on minimizing these under BoG’s CRD to enhance resilience.