Macroeconomics Answers

Suppose that the production function of the firm is:

Q = 100L^1/2.K^1/2

 K= 100, P = $1, w = $50 and r = $40. Determine the quantity of labor that the firm should hire in order to maximize the profits. What is the maximum profit of this firm?

Suppose the following demand and supply function:

Q^d = 750 – 25P

Q^s = -300 + 20 P

       i.           Find equilibrium price and quantity

     ii.           Find consumer and producer surplus

Formulate the demand equations and estimate Qd for P=33 by using the following data:   

Price level Quantity Demand

38 200

36 500

34 800

32 900

30 1000

28 1400

it works out the demand function for the book as:                                              

Q = 5000 – 5P

Find out

i)                   Demand curve

ii)                 Number of book sold at P = Rs. 25

iii)               Price for selling 2500 copies

iv)               Price for zero sales

v)                 Elasticity for fall in price from Rs. 25 to Rs. 20.

suppose the following data describe a nation’s population: Year 1 Year 2 Population 200 million 203 million Labor Force 120 million 125 million Unemployment rate 6 percent 6 percent a. How many people are unemployed in each year? b. How many people are employed in each year? c. Compute the employment rate (i.e., number employed/population) each year. d. How can the employment rate rise when the unemployment rate is constant?

Compute the price index for each year. Use the first year as the base year. What was the inflation rate between the two years. Item Quantity Unit Price-Last Year Unit Price-This Year Coffee 20 pounds $3.00 $4.00 Tuition 1 year 4,000.00 7,000.00 Pizza 100 pizzas 8.00 10.00 VCR rental 75 days 15.00 10.00 Vacation 2 weeks 300.00 500.00

Suppose you have $500 in savings when the price level index is at 100.

a. If inflation pushes the price level up by 20 percent, what will be the real value of your savings?

b. What would happen to the real value of your savings if the price level instead declined by 10 percent

Given the following maro-economic model

Y=C+I+G

C=20+0.07Y

I=12+0.1Y

G=10

(a) Express the model in matrix form

(b) Using Cramer's Rule calculate the equilibrium values of the national income (Y), Consumption (C) and Investment (I)

(c) What is the income multiplier?

The Government has various tools available to deal with the Market Failure, the few of the tools available to the Government was

·        Price Profit Regulations

·        Restrictive Trade policy and practices

·        Direct Controls or Regulations

·        Patents and Law of Tort

·        Subsidy Policy

·        Tax Policy

·        Foreign Exchange Policy.

Briefly provide your views on all the above to predominantly sustain for an Economy in Market forces.

A book is to be written by Britney Spears. Batman Books agrees to pay Britney $6 million for the rights to this not- yet- written memoir. According to one leading publisher, BatmanBooks could earn a profit of roughly $1.2 million if it sold 625,000 copies in hardcover. On the other hand, if it sold 375,000 copies, managers would lose about $1.3 million. Publishing executives stated that it was hard to sell more than 500,000 copies of a nonfiction hardcover book, and very exceptional to sell 1 million copies. Were Batman managers taking a substantial risk in publishing this book?