Macroeconomics Answers

a) Let a doctor earns $20 per hour, a plumber $ 5 per hour, and a professor $ 10 per hour. Everything else the same, which one will devote more hours to negotiating the price of a new car? Explain

b) What is the full cost (direct cost +opportunity) of pursuing BBA from IMSciences? Impose appropriate assumptions if exact value(s) of item(s) is/are not available.

Choose any five sectors you wish and assess economic effects of Covid-19 to Tanzania focusing on sectors you have selected. In your discussion suggest possible solutions (what can be done to bring our economy where it was) but also to ensure sustainable growth of the economy.

Assuming that the government decides to address the low level of production and employment caused by COVID-19 by cutting down taxes (personal income and corporate taxes).

Explain by the use of graphs, the impact of such fiscal policy on aggregate output. In your explanation, describe the interaction between the Money market,

IS-LM and AD-AS Model.

3. John Scott has R200 per week available to spend on beer and cigarettes. Beer costs R10 per bottle and cigarettes cost R40 per packet. Suppose John buys 8 bottles of beer and 3 packets of cigarettes and that his marginal utility from beer is then 20 utils and that from cigarettes 35 utils. Is he in equilibrium? If not, should he buy more beer or more cigarettes? Explain.

4. Consider a consumer’s choice between meat and fish. Use indifference curves to illustrate the income effect and substitution effect of an increase in the price of fish.

Suppose that you are the manager of a soccer stadium where all the tickets always have to be sold at the same price. Two matches are scheduled to be played during the next fortnight, the first between Sundowns and Pirates and the second between two First Division sides.

(a) Market research indicates that you can sell 40 000 tickets for the Sundowns-Pirates clash at R10 each, or 30 000 tickets at R20 each. Which option would you choose? What is the price elasticity of the demand for tickets for this particular game?