Macroeconomics Answers

Explain two numeric model that can be used to select the high speed train project. Which method is suitable to be used in evaluating the project feasibility plan? Why?                          

Suppose you are given the following​ information:

Labor force

218.43

Adults in the military

2.37

Nonadult population

58.27

Employed adults

180.06

Institutionalized adults

2.97

​Nonmilitary, noninstitutionalized adults not in labor force

31.61

a. What is the total​ population?  

nothing

million. ​(Enter your response rounded to one decimal​ place.)

Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level.

a.     What happens to the Pakistan’s economy (output and price) in the short run? Explain your answer using AS-AD graphs. (2.5 Marks, Maximum 150 words)

b.     What happens to Pakistan’s economy (output and price) in the long run? Explain your     answers using graphs. (2.5 Marks, Maximum 150 words)

Wage Bargaining: Reconsider the wage bargaining game from class, where pilot's outside option (s_o) is private information, and United believes that it is uniformly distributed on (0,10). As in class, assume that United makes a take-it-or-leave-it wage offers (s) to the pilots. If the pilots reject the offer, United goes bankrupt.

(a) Calculate the optimal offers for profits (before salaries) л = 16. Are there any mutually beneficial trades that do nor occur in equilibrium?

(b) Calculate the optimal offer (s) for profits (before salaries) л = 20. Are there any mutually beneficial trades that do nor occur in equilibrium? Discuss.

Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level.

a.     What happens to the Pakistan’s economy (output and price) in the short run? Explain your answer using AS-AD graphs. (2.5 Marks, Maximum 150 words)

What happens to Pakistan’s economy (output and price) in the long run? Explain your     answers using graphs.

Due to COVID-19 situations the oil prices fall in international market. Let’s assume that output starts at its natural level.

a. What happens to the Pakistan’s economy (output and price) in the short run? Explain your answer using AS-AD graphs. (2.5 Marks, Maximum 150 words)

b. What happens to Pakistan’s economy (output and price) in the long run? Explain your answers using graphs. (2.5 Marks, Maximum 150 words)

You have been hired by Kia as manager for its Pakistan operations. Assume following is the shortrun production function at their assembly plant outside Karachi: Q = 10L2 – 0.5 L3 where L is variable input labor, Q is output of Cars assembled . Find the ranges of the three stages of production. 

AVAC is the only pharmaceutical firm producing a Vaccine.

The Demand Curve for its product is Qd = 250 – 50 P

where P is Price and Q are packs of vaccines in ‘000

Total Cost Function estimated by the firm is TC = 15 + 0.5Q

where Q is monthly output.

a. What is the market structure of AVAC? State its characteristics.

b. To maximize profit,

(i) What will be the optimum price and how many packs of Vaccine should the firm produce and sell per month?

(ii) If this number of packs is produced and sold, what will be the firm’s monthly profit?

c. Using available information, draw AVAC’s demand, marginal revenue and marginal cost curves in a graph and clearly label thefirm’s profit maximizing price, quantity and profit. Do you observe any welfare loss? If so, also indicate and label the area on the graph.

d. Assume all other pharmaceutical firms in the market start producing the Vaccine and the market becomes competitive. What will be the impact on price and marginal revenue?Would the market structure of the firm remain the same? Support your answer with help of the firm’s graph.

Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions:

Bangladesh Q1 = 12 – P1

Sri Lanka Q2 = 8 – P2

Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is

C = 5 + 2 (Q1+ Q2)

a. Determine the company’s total profit function. Also,

(i) What are the profit maximizing levels of price and output for the two markets?

(ii) Calculate the marginal revenues in each market.

b. Now consider two cases:

(i) Company is effectively able to price discriminate in thetwo markets. What will be the total profits?

(ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit maximizing levels of price,output, and the total profits?

c. Analyze, with graphs, the two alternative pricing strategies available to the company.

You have been hired by Kia as manager for its Pakistan operations. Assume following is the short-run production function at their assembly plant outside Karachi:

Q = 10L^2 – 0.5L^3 where L is variable input labor, Q is output of Cars assembled

a. Find the ranges of the three stages of production.

b. Demonstrate the relationship between Total Production, Marginal Product and AverageProduct in a hypothetical graph and clearly label the three stages as per the values of Lyou observed in (a) above.

c. At the end of the year it is expected that output will double with purchase ofnew equipment and machinery. The production function is estimated to be

Q = 60L^.30K^.70 where L is labor and K is capital.

Suppose initial L1 = 1 and K1 = 1. When inputs are in increased to L2 = 2 and K2 = 2,

do you observe increasing, decreasing or constant returns to scale?

d. Assume Kia Head Office is considering hiring more laborers either at their Gwadarplant or alternatively at the Karachi plant. What will be your advice if workers’ marginal product is 40 at wage of Rs=5/hour in Karachi and marginal product is 28 at wage of Rs=4/hour in Gawdar?