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1. Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. Calculate the market equilibrium quantity. (3 marks)
2. Calculate the price consumers would have to pay for the market to achieve the socially optimal level of production. [Hint: use QS = QS + tax but firms will receive a price P – t, therefore, QS = -100 + 100 (P-1). Find new equilibrium price] (3 marks)
3. Calculate the market equilibrium quantity. (1 mark)
4. Calculate the tax revenue collected by the government (1 mark)
suppose there are 1000 (type a) people who value flood control more than the 1000 (type b) people.type a demand qd = 100 − p type b demand qd = 50 − p where q measures the quality of flood control. if the price of a unit of flood control is $100,000 and the citizens of toadhop did not work together, what would be the amount of flood control purchased? (2 marks)
Applied Economic Research either uses a Naturalistic (positivist) or Constructivist view of things.
With examples, discuss key differences and similarities between the two approaches
With its expenditures and paying salaries to its employees, the government plays an integral part in changes of aggregate demand. True or false?
GDP deflator takes into account changes in consumption patterns and related quality of goods and services over the period of one year.
The job creation (i.e. increase in employment) is usually faster than the growth of total production in one economy.
In case of sticky (flexible) prices and wages, aggregate supply is vertical.
Suppose that C= a+ bY, where C= consumption, a= consumption at zero income, b= slope and Y=income. Are C and Y positively or negatively related?
Suppose that the economy is characterized by behavioral equations. C =c +yd
Where consumption autonomous= 280
Investment=270
Government spending =300
Taxes =20%
Marginal propensity to save= 40%
Solve for
a. Equilibrium GDP
b. Disposable income
C. Consumption spending
In an essay, Use specifically the Solow growth model to discuss the implications of this pandemic on the prospects of longrun economic growth for South Africa.
