Macroeconomics Answers

Suppose a firm has its TR and TC functions given as follows:

        TR =300 Q -3Q² and TC =500 +50 Q +2Q²

         A. State the profit function of the firm

         B. State the marginal profit function.

         B .Find the level of Q that maximizes total profit.

         D .State the marginal revenue function  

         E .State the marginal cost function.

Use a graph to explain the impact of a tax increase on output and interest rate in the IS-LM model.

9.    Use 2 graphs to explain, in the Mundell-Flemming model, under flexible and then fixed exchange rate arrangement, the impact of money supply decrease on output and exchange rate.

Use a graph to demonstrate, in the Solow Model, how the saving rate affects the steady- state income level. In the model, does the saving rate affects the steady- state growth rate of income or growth rate of income per worker? Why or why not?

Without assuming exogenous technological progress, how does the endogenous growth model, e.g., the Y= AK model, explain income growth? Use algebra to demonstrate it. What is the difference between this explanation and that of the Solow model? Be aware how Solow model explains income growth.

If the store currently charges a price of $50, then increases that price to $60, what happens to total revenue from shoe sales (calculate P * Q before and after the price change)? Repeat the exercise for initial prices being decreased to $40 and $20, respectively. 

1. Omer and Hanna are in an argument where Omer says that in a two sectoral economy the income of one sector is equal to the expenditures of the other sector, where else Hanna believes the otherwise. Using the two-sectoral diagram justify who in your opinion is right and why. (5 marks)

4.   A perfectly competitive firm has total revenue and

total cost curves given by:

            TR = 100Q                           TC = 5,000 + 2Q +

0.2 Q²

a.         Find the profit-maximizing output for

this firm.

b.         What profit does the firm make?

3.  The table below shows the weekly relationship between output and number of workers for a factory with a fixed size of plant. P= 10$: w=100$

Number of Workers

Output

0

  0

1

 50

2

110

3

300

4

450

5

590

6

665

7

700

8

725

9

710

10 

705

a.   Calculate the marginal product of labor.

b.   At what point does diminishing returns set in?

c.   Calculate the average product of labor.

d.  Find out optimum level of variable input usage 

What do you think are the defining characteristics of a science? Does the study of the economy have these characteristics? Do you think macroeconomics should be called a science? Why or why not?