Macroeconomics Answers

2. Hale and Heart Limited (HH) is a small distributor of B&Q Foodstores, Inc., in the highly competitive health care product, papaya extract, is $10. HH’s total cost (TC) function is given as Qd=100+2Q+0.01Q2 .
a. What is the firm’s profit-maximizing level of output? What is the firm’s profit at the profit-maximizing output level? Is HH in short-run or long-run competitive equilibrium? Explain.
b. Diagram your answer in above
c. At P=$10, what is HH’s break-even price and output level?
d. What is HH’s long-run break-even price and output level?
e. What is HH’s shutdown price and output level? Does this price-output combination constitute a short –run competitive equilibrium? Explain.

1. A firm has the following production function Q=K1/3L2/3. It will produce 80 units of output and faces prices for labour and capital as capital follows: w=10, r=15.
a. Show whether the production function exhibits decreasing, increasing or constant returns to scale?
b. Find the cost minimizing bundle of labour and capital
c. Explain what the prisoners dilemma means.

the production function for T-shirts can be represented as q = L0.25 K0.75.
Draw on a graph a set of isoquants for q=100, q=200 and q=400. What is the value of K
and L used on each isoquant when the firm uses the same amount of K and L? Calculate the
MRTS as function of L and K, and show that the isoquant is convex
Show if this production function has increasing, decreasing or constant return to scale.
Then consider a general Cobb-Douglas production function of the form q = La Kb where a and
b are any positive value and find the conditions for those two parameters, under which the
production function has increasing return to scale.

Impact of macroeconomic variables on values of currencies.

Suppose the government is planning to subsidize τ fraction of the cost of renting capital
such that 0 < τ < 1. How would this affect real wage rate, real rental rate, real interest rate and price level
in long run and very-long run in a closed market economy?

Suppose the government is planning to subsidize τ fraction of the cost of renting capital
such that 0 < τ < 1. How would this affect real wage rate, real rental rate, real interest rate and price level
in long run and very-long run in a closed market economy?

Select four families that you know very well in addition to your own family as a case study, calculate unemployment rate among in your population. Make sure to define your population.

Distinguish between demand‐pull and cost-push inflation. In your answer, consider the following: Graphical illustration of each cause of inflation (5 x 2=10) Provide any three of your own examples/scenario that might be the cause for each graph you drew above (3 x 2 = 6) Recommend the policy tools to use in order to curb each type of inflation mentioned above (2 x 2 = 4)

Explain, using the AD‐AS model, how the South African Reserve Bank (SARB) can use accommodation policy as a tool to recover from the negative effects of this COVID‐19 pandemic.
Your answer must include the following: The description of the type of monetary policy required How the accommodation policy tool will be utilized An explanation of how the implementation of this tool will work their way through the economy to achieve the desired effect;
The AD‐AS graph showing the implications of your recommendations

A simplified economy is specified as follows:

A. Goods market, all values C, I, G and NX values are in billions of C$:

Consumption Expenditure: C = 150 + 0.8(Y-T)Investment Expenditure: I = 1,300 - 460i Government Expenditure: G = 330Lump-sum Constant Taxes: T = 330Exports: 70 Imports: 10


B. Money market, all Md values are in billions of C$:

Interest Rate: i = 0.12 or 12%Money Demand: Md = 790 - 1,800i


Note: Please keep your answers accurate to two decimal places.

a) Given the above information, solve for the following: the equilibrium Y, the money supply M, the consumption expenditure C, and the investment expenditure I.

Find Y, M,C, and I

Please help