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Is this production function characterised by constant returns to scale? Demonstrate
Compute output when K = 49 and N = 81
Consider an economy that consists only of those who bake bread and those who produce its ingredients. Suppose that this economy’s production is as follows: 1 million loaves of bread (sold at Rs. 2.00 each); 1.2 million pounds of flour (sold at Rs. 1.00 per pound) and 100,000 pounds each of yeast, sugar & salt (all sold at Rs. 1.00 per pound). The flour yeast, sugar & salt are sold only to bakers, who use them exclusively for the purpose of making bread.
a. b.
Calculate the total income of the economy.
How much value is added to the flour, yeast, sugar & salt when the bakers turn into bread?
*Production volume for product A was estimated at 1000 units.
*Only 80% production was achieved.
*Each unit of product A requires 0.5 hours at an hourly rate of N$8.50
*80% production volume was produced at 45 minutes per unit at an hourly rate of N$8.00
*Buys raw materials from local suppliers at N$3.50 per kilogram
*Each unit requires 1.5 kilograms
*Two Kilograms were used per unit
*Total monthly budgeted manufacturing overheads costs amounted to N$950
*Actual monthly manufacturing overheads cost was N$1200
*Lungameni Enterprises production manager view that manufacturing overheads cost be absorbed on basis of direct labour costs. There was no opening inventory and all units produced were sold.
Required:
1.For the information above calculate the gross profit / loss
2.Any recommendation for Lungameni Enterprise production manager?
Explain the determination of equilibrium level of GDP using the aggregate expenditure approach and the savings investment approach in a two sector model. Do you think that equilibrium will always occur at full employment level of output?
If the demand and supply curve for T-Shirts at Nagindas Store are:
D = 100 - 6P, S = 28 + 3P
Where P is the price of T-Shirts in dollars ($), what is the quantity of T-Shirt bought and sold at
equilibrium?
Q
In an open economy, the marginal propensity to consume c is 0.9, and the tax rate is 1/3. If the budget deficit increased by 15 mil. € determine:
a) the change in the level of investments that could have led to this increase in the budget deficit;
b) assuming that the increase in budget deficit is due only to the increase in government spending, determine the change in government spending (∆G) that could have led to this effect.
Consider a closed economy for which the following initial data are known: c = 0.7, t = 0.15; the initial level of GDP is 3400 bil. $, the private consumption is 2000 bil. $, G = 500 bil. $, I = 900 bil. $ and autonomous taxes, transfers and subsidies are 0.
- a) Determine the effect of an increase in the level of investments by 10 bil. $ on GDP (∆Y), budget deficit (∆BD), taxes (∆T) and private consumption (∆C).
- b) Determine the effect of an increase of 5 p.p. (percentage points) in tax rate on the GDP and the budget deficit.
Economic theory suggests that two countries can benefit from trade even if one country is more efficient at producing everything. What concept does this theory describe?
International economic development does not affect the South African economy?
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