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tour operating firm plans to take tourists between Addis Ababa and Jimma. its estimated cost function given by C =100 +50 N+4N2 (Where N denotes the number of passengers per day)
A. State the average cost function.
B. State the marginal cost of the average cost function.
C. Find the number of passengers per day that minimize average cost.
D. What is the minimum average cost at the optimal level of passenger?
E. What will be the total cost at the optimal level?
Find data on GDP and its components, and compute the percentage of GDP for the following components for 1950, 1975, and 2000.
a. Personal consumption expenditures; b. Gross private domestic investment; c. Government purchases; d. Net exports; e. National defense purchases; f. State and local purchases; g. Imports
* Do you see any stable relationships in the data? Do you see any trends? (Hint: A good place to look for data is the statistical appendices of the Economic Report of the President, which is written each year by the Council of Economic Advisers. Alternatively, you can go to www.bea.doc.gov, which is the Web site of the Bureau of Economic Analysis.)
Suppose a Mrs. Chakay marries her butler, Ato Tachakay. After they are married, her husband continues to wait on her as before, and she continues to support him as before (but as a husband rather than as an employee). How does the marriage affect GDP? How should it affect GDP? Justify your debate.
A farmer grows a bushel of wheat and sells it to a miller for birr100. The miller turns the wheat into flour and then sells the flour to a baker for birr 300. The baker uses the flour to make bread and sells the bread to Rift Valley University for birr 600.The Rift Valley University students eat the bread. What is the value added by students? What is GDP?
In your opinion, does currency depreciation solve the economic problems of a country? Justify your answer.
Discuss the effects of currency appreciation and depreciation on international trade.
Why is depreciation included in calculating net national income? Why there has to be capital consumption in calculating income generation
In the Mundell-Flemming Model, under the floating exchange rate regime, if money supply increase, what will happen to output and exchange rate? Briefly explain.
a. Suppose that the government wants to raise investment but keep output constant. In the
IS–LM model, what mix of monetary and fiscal policy will achieve this goal?
b. In the early 1980s, the U.S. government cut taxes and ran a budget deficit while the Fed
pursued a tight monetary policy. What effect should this policy mix have?
Use the IS–LM diagram to describe the short run and long-run effects of the following changes
on national income, the interest rate, the price level, consumption, investment and real money
balances
a) An increase in taxes
