Macroeconomics Answers

Given that C=C1 = cy and C1=500, c3/4, y=1000
1)total consumption is 500
2)total consumption is 1250
3)aggregate demand is 1000
4)marginal propensity to consume is 1/4

Suppose in a region each household produces either 1 pair of shoes or 1 gallon of milk per hour. One mile of round-trip travel takes 12 min. A firm produces shoes. The firm faces CRS in production and charges competitive price.
a. What is the slope of net price curve?
b. The market radius of the firm is 4 miles. What is the firm’s average cost of producing shoes?

Suppose the price of an inferior good,product A is currently 14 dollar and is produced at a marginal cost of 10.50 dollar per unit. The estimated price elasticity of demand for product A To be 2.5. The producer of product A should____ as the optimal price indicated by the Current elasticity is_____.
Given options; a) increase the price 15.50 b) increase the price 17.50 c) decrease the price 13 d)leave the price unchanged 14 dollar

2. Suppose in a region each household produces either 1 pair of shoes or 1 gallon of milk per hour. One mile of round-trip travel takes 12 min. A firm produces shoes. The firm faces CRS in production and charges competitive price.
a. What is the slope of net price curve?
b. The market radius of the firm is 4 miles. What is the firm’s average cost of producing shoes?

SECTION II (20 marks): Answer all parts of the question. When you answer using a diagram,
explain and label the axes carefully. Answers must be given in the space provided below each
question. Please show all working for each part of the question.
An economy is described by the following equations:

C = 500 + 0.85(Y – T), C is consumption, Y is income and T is taxation
M=0.05Y Imports
I
P = 1500, planned investment
G = 400, government spending
T = tY, t = 0.2 is the marginal tax rate and exogenous taxes,

Discuss five determinants of economic growth in an economy. (25)

Drawing from country experiences, what is needed in order to carry out successful trade policy reforms? (25)

Draw a demand and supply curve for textiles in south Africa. Illustrate on the graph how specific import tariff will affect the price, quantities consumed imported and domestically produced

which one of the following is not a source of economic growth
(1) capital widening
(2) imports
(3) government spending
(4) natural resources