Economics of Enterprise Answers

Defend this statement:The participants in a closed system is interdependent on each other

. Explain your answer with the help of diagram. What happens to price, quantity and market 

equilibrium when:

a) A demand decreases and supply increases.

b) A demand and supply both increases.

Ali went for real state training for 12 weeks for $3000 and $200 for books. During these 12 weeks, he can only work for 20 hours instead of 40 hours per week for $15per hour.

Ali’s rent remains the same$1000during the 12 weeks of the training.

What is opportunity cost of attending the training.

 In the UK the Royal Society for the Protection of Birds (RSPB) has recently bought land around the coast to prevent building on the area where rare birds breed. It has received donations from the public towards the cost. The RSPB plans to set up special visitor centres in the area. (a) Explain which factors of production are involved in the above action by the RSPB. [4] (b) Discuss whether the local area might be more likely to gain or lose from the action of the RSPB. [6] (c) Define the following terms and identify an example of each in the above passage. (i) private cost (ii) social benefit. [4] (d) The RSPB is a private charity. Do you think the protection of rare birds should be the responsibility of a government rather than private charities?

The table below shows information about the closed economy.

Real GDP (RM million) Aggregate Expenditure (RM million) 

850 880

900 920

950 960

1000 1000

1050 1040

a) If the full employment level of income is RM1, 350 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [a(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

b) If the full employment level of income is RM850 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [b(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

The table below shows information about the closed economy.

Real GDP (RM million) Aggregate Expenditure (RM million) 

850 880

900 920

950 960

1000 1000

1050 1040

a) If the full employment level of income is RM1, 350 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [a(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

b) If the full employment level of income is RM850 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [b(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

The table below shows information about the closed economy.

Real GDP (RM million) Aggregate Expenditure (RM million) 

850 880

900 920

950 960

1000 1000

1050 1040

a) If the full employment level of income is RM1, 350 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [a(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

b) If the full employment level of income is RM850 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [b(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

Example 1. Mr. Orsini Makes the Call

Mr. Orsini thinks the stock of Apple (symbol AAPL) will go up in value. On March 19, 2021, he buys a call option for 100 shares of AAPL at a strike price of $410. The current share price is $397.77. The cost of the call option, or premium, is $5 per share, for a total of $500. The call option will expire on June 30, 2021.

If the AAPL stock goes up to $420 and the premium goes to $9 before the expiration date, Mr. Orsini has an “in the money” option, which means that the stock has increased in value to more than the strike price. It’s time for Mr. Orsini, who is now very proud of his shrewd investing tactics, to decide how to cash in. He has a few choices: he can exercise the option and purchase the stock, allowing him to buy stock worth $42,000 (100 x $420) for $4,100 (100 x $410). How much would he make in profits? SHOW YOUR WORK!!

If he sold the option, how much would he make? SHOW YOUR WORK!!

The table below shows information about the closed economy.

Real GDP (RM million) Aggregate Expenditure (RM million) 

850 880

900 920

950 960

1000 1000

1050 1040

a) If the full employment level of income is RM1, 350 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [a(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

b) If the full employment level of income is RM850 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [b(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

Suggest 2 benefits of importing goods and services and foreign investment