Economics for Accounting and Finance
Consider the case of robo-advisory, introduced by a bank as a substitute for the regular face-to-face service offered by its human advisors. However, the robo-advisory service can only cover some of the aspects that a human advisor can offer. Nonetheless, it is faster and the service can be used by the clients from their home instead of travelling to the bank.
- a) Plot the indifference curve (IC) derived by the customer of the bank with regard to a combination of human-advisory and robo-advisory. Explain the reasons for the shape of the IC.[10 marks] Economics for Accounting and Finance
- b) A technological improvement leads to a decrease of the price for robo-advisory. Show the effect of the reduction of the price using the IC and any relevant other curves.
[10 marks]
- c) Suppose a technological innovation makes the robo-advisory completely comparable to the client experience and quality of service conducted by human advisors. Provide a graphical illustration of this case and explain the shape of the IC.[15 marks]
- a) Caring for the environment is part of our obligation to the future generations. Why is it difficult to incorporate this environmental aspect in calculating GDP? Discuss the socio-economic implications as a result of this difficulty.[10 marks]
- b) Critically analyse why the circular economy suggests small scale activities at local level.[10 marks]
- c) Provide an example of green jobs versus traditional jobs and their related costs for the employer. Discuss the environment as a type of good and elaborate on the role of the Government with regard to the provision of this good.